Net income figures for Flounder Ltd. are as follows: 2016 - $77,800 2017 - $56,500 2018...

Net income figures for Flounder Ltd. are as follows: 2016 - $77,800 2017 - $56,500 2018 - $86,400 2019 - $90,600 2020 - $71,600 Future income is expected to continue at the average amount of the past five years. The company’s identifiable net assets are appraised at $468,200 on December 31, 2020. The business is to be acquired by Novak Corp. in early 2021. The normal rate of return on net assets for the industry is 9%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to average excess earnings capitalized at 25%? Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if a perpetual 18% return is expected on any amount paid for goodwill? (Round answers to 0 decimal places, e.g. 5,275.) Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to five years of excess earnings? (Round answers to 0 decimal places, e.g. 5,275.) Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to the present value of five years of excess earnings capitalized at 20%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Novak Corp. pay for goodwill $ Novak Corp. pay for Company $

Solutions

Expert Solution

Year	Income
2016	77800
2017	56500
2018	86400
2019	90600
2020	71600

net assets	468200

		Ans.
1. What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to average excess earnings capitalized at 25%?
Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if a perpetual 18% return is expected on any amount paid for goodwill? (Round answers to 0 decimal places, e.g. 5,275.)	$ 84,276
Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to five years of excess earnings? (Round answers to 0 decimal places, e.g. 5,275.)	$ 69,570
Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to the present value of five years of excess earnings capitalized at 20%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)	$ 85,920
Novak Corp. pay for goodwill $ Novak Corp. pay for Company $

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The pretax financial income (or loss) figures for Tamarisk Company are as follows. 2016 275,000 2017...

The pretax financial income (or loss) figures for Tamarisk Company are as follows. 2016 275,000 2017 88,000 2018 (176,000 ) 2019 (115,000 ) 2020 148,000 2021 108,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2016, and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net...

Hendry Corp. reported net incomes for the last three years as follows: 2018 2017 2016 $180,000...

Hendry Corp. reported net incomes for the last three years as follows: 2018 2017 2016 $180,000 $240,000 $225,000 During the 2018 year-end audit, Hendry's newly appointed auditors discover that Hendry bought a machine on January 1, 2015 for $125,000 cash, with a $25,000 estimated residual value and a five-year life. The company debited an expense account for the entire cost of the asset. Hendry uses straight-line depreciation for all machinery. Instructions (Ignore all income tax effects) a) Prepare the general...

Flounder Company reported 2017 net income of $156,700. During 2017, accounts receivable increased by $13,900 and...

Flounder Company reported 2017 net income of $156,700. During 2017, accounts receivable increased by $13,900 and accounts payable increased by $9,673. Depreciation expense was $39,900. Prepare the cash flows from operating activities section of the statement of cash flows. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Otis Company’s income statement information follows: 2018 2017 Net sales $ 480,000 $ 320,000 Income before...

Otis Company’s income statement information follows: 2018 2017 Net sales $ 480,000 $ 320,000 Income before interest and taxes 120,000 98,000 Net income after taxes 81,000 72,000 Interest expense 9,000 8,000 Stockholders’ equity, December 31 (2016: $200,000) 300,000 240,000 Common stock, December 31 240,000 200,000 The average number of shares outstanding was 9,600 for 2018 and 8,000 for 2017. Required Compute the following ratios for Otis for 2018 and 2017. Number of times interest was earned. (Round your answers to...

2019 2018 2017 2016 Net Investment Income 0.78 1.10 0.80 .34 Dividends Paid on Net Investment...

2019 2018 2017 2016 Net Investment Income 0.78 1.10 0.80 .34 Dividends Paid on Net Investment Income (0.75) (0.90) (0.50) (0.25) Net Realized and Unrealized Gains (Losses) on Security Transactions (4.43) 1.25 3.25 (1.50) Cash distributions from realized Gains - (1.00) (1.60) - Increase (Decrease) in NAV (4.40) 0.45 1.95 (1.41) NAV Beginning of the year 15.99 15.54 13.59 15.00 NAV End of Year 11.59 15.99 15.54 13.59 This a no-load mutual fund. a: Using the cash flow worksheet on...

The following relates to a firm: Statement of Financial Position Figures in Sh. 2018 2017 2016...

The following relates to a firm: Statement of Financial Position Figures in Sh. 2018 2017 2016 Cash 308,000 356,250 368,000 Accounts receivables 885,000 625,000 492,000 Inventory 1,115,000 825,000 530,000 Prepaid expenses 97,000 93,750 40,000 PPE 2,775,000 2,550,000 2,295,000 Total assets 5,180,000 4,450,000 3,725,000 Accounts payable 1,289,000 752,500 492,500 Loan 975,000 1,025,000 825,000 Share capital (Sh. 10 par) 1,625,000 1,625,000 1,625,000 Retained earnings 1,291,000 1,047,500 782,500 Total liability and equity 5,180,000 4,450,000 3,725,000 Income Statement 2018 2017 Sales 6,725,000 5,300,000 Cost...

The Income Statement for XYZ Company for 2016 and 2017 is as follows: 2017 Sales $4,000,000...

The Income Statement for XYZ Company for 2016 and 2017 is as follows: 2017 Sales $4,000,000 Cost of Goods Sold 2,500,000 Gross Profit 1,500,000 Selling Expense 600,000 Administrative Expense 200,000 Total Operating Expense 800,000 Income from Operations 700,000 Income Tax Expense 50,000 Net Income 650,000 2016 $3,500,000 2,400,000 1,100,000 700,000 150,000 850,000 250,000 20,000 230,000 Instructions: Using the above comparative horizontal analysis for ABC Company.

The pretax financial income (or loss) figures for Concord Company are as follows. 2015 $166,000 2016...

The pretax financial income (or loss) figures for Concord Company are as follows. 2015 $166,000 2016 258,000 2017 77,000 2018 (166,000 ) 2019 (384,000 ) 2020 131,000 2021 105,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2015 and 2016 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the...

The pretax financial income (or loss) figures for Windsor Company are as follows. 2015 $169,000 2016...

The pretax financial income (or loss) figures for Windsor Company are as follows. 2015 $169,000 2016 247,000 2017 79,000 2018 (169,000 ) 2019 (356,000 ) 2020 131,000 2021 99,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2015 and 2016 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the...

Income Statement 2016 2017 2018 Net sales 1,304,000 1,507,000 1,791,000 Cost of sales 781,000 952,000 1,210,000...

Income Statement 2016 2017 2018 Net sales 1,304,000 1,507,000 1,791,000 Cost of sales 781,000 952,000 1,210,000 Gross profit 523,000 555,000 581,000 Marketing 135,400 149,670 220,245 General administration 151,000 151,200 219,560 Depreciation 35,695 49,805 60,345 EBIT 200,905 204,325 80,850 Interest 45,000 57,000 70,000 EBT 155,905 147,325 10,850 Income tax 48,331 45,671 3,364 Net income 107,574 101,654 7,487 Balance Sheet 2016 2017 2018 Cash 55,000 43,500 11,000 Accounts receivable 220,000 261,000 376,337 Inventories 388,124 437,139 545,000 Prepaid insurance 25,000 28,000 28,500 Total...

Subjects