Question
Question 10.2 (Total: 18 marks; -3 marks per error) B52 Corporations pre-tax accounting income of $726,000 for the year 2020 included the following items: Amortization
Question 10.2 (Total: 18 marks; -3 marks per error)
B52 Corporations pre-tax accounting income of $726,000 for the year 2020 included the following items:
Amortization of identifiable intangibles | $140,000 |
Depreciation of building | 119,000 |
Loss from discontinued operations | 46,000 |
Unusual, non-recurring gains | 157,000 |
Profit-sharing payments to employees | 69,300 |
Lush Industries Ltd. would like to purchase B52 Corporation. In trying to measure B52s normalized earnings for 2020, Lush determines that the buildings fair value is triple the book value and that its remaining economic life is double the life that B52 is using. Lush would continue the profit-sharing payments to employees, with the payments being based on income from continuing operations before amortization and depreciation.
Required
Calculate the 2020 normalized earnings amount of B52 Corporation that Lush would use to calculate goodwill.
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