P. Company is considering the acquisition of S. Company. To assess the amount it might be willing to pay (offering price), P. Company makes the following computations and assumptions. A. S. Company has identifiable assets with a total fair value of $9,000,000 and liabilities of $5,600,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 25% higher than book value, and land with a fair value 35% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by S. Company B. S. Company's pretax incomes for the years 2018 through 2020 were $700,000, $935,000, and $550,000, respectively. P. Company believes that an average of these earnings represents a fair P. Company is considering the acquisition of S. Company. To assess the amount it might be willing to pay (offering price), P. Company makes the following computations and assumptions. A. S. Company has identifiable assets with a total fair value of $9,000,000 and liabilities of $5,600,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 25% higher than book value, and land with a fair value 35% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by S. Company B. S. Company's pretax incomes for the years 2018 through 2020 were $700,000, $935,000, and $550,000, respectively. P. Company believes that an average of these earnings represents a fair