Meck Company is considering the acquisition of another entity. The following data relate to the acquiree:

Shareholders equity (including the patent)	5,000,000
Earnings for prior three years	1,500,000

The acquiree has a valuable patent which is not recorded. If the entity is sold, the patent would be transferred to the buyer for P500,000. Other assets are properly appraised. The patent has a remaining life of 5 years. The earnings of the entity are expected to increase 10% more than the average earnings of the past three years before taking into consideration the amortization of the patent cost.

Compute for the goodwill under the following methods:

1. Average future earnings are capitalized at 8%

2. Goodwill is measured at the average excess earnings capitalized at 10% with normal rate at 8%.

3. Goodwill is measured at the present value of the average excess earnings discounted at 10% for four years with normal rate of 8%. The present value of an ordinary annuity of 1 for 4 years at 10% is 3.17.