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12. A business valuation consultant has been hired to value the Silver Pizza Parlor franchise. Average earnings per year over the last five years have
12. A business valuation consultant has been hired to value the Silver Pizza Parlor franchise. Average earnings per year over the last five years have been S62,000 and have been relatively stable in amount. The franchise was originally purchased for $100,000 and the current fair market value of the net identifiable assets is $300,000. What is the amount of implied goodwill if the average earnings rate in this industry is 10% of investment? (a) $320,000. (b) $310,000 (c) S300,000. (d) $620,000. 13.Thecosts of onganizing a business, includnges f aomys and accountants, should be: (a) Capitalized, but not amortized, because of the indefinite life of the (b) Capitalized and amortized only over the five year period allowed by (c) Capitalized and amortized over their useful life, not to exceed the businesS. the Internal Revenue Code (IRC) maximum period allowed under GAAP or expensed in the period in which they are incurred, depending on materiality. Expensed in the period in which they are incurred. (d) Which of the following costs is included in research and development expense? (a) Periodic design changes to existing products. (b) Design, construction, and testing of preproduction prototypes and 14. models (c) Ongoing efforts to improve existing products (d) Troubleshooting in connection with breakdowns during production of existing products
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