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The net assets of Ace Inc. excluding goodwill totaled P2,400,000 and earnings for the last 5 years totaled P2,670,000. Included in the latter figure are
The net assets of Ace Inc. excluding goodwill totaled P2,400,000 and earnings for the last 5 years totaled P2,670,000. Included in the latter figure are gain on sale of equipment P225,000, typhoon loss of P120,000 and sales commission of P45,000. In developing a sales price for the business a 14% return on the net worth is considered normal for the industry, and the annual excess earnings are to be capitalized at 20% in arriving at goodwill. What is the amount of goodwill?
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