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The owners of Rainier Company are planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to
The owners of Rainier Company are planning to sell the business to new interests. The cumulative net earnings for
the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. Goodwill is measured by
capitalizing excess earnings at 25% with normal earnings at 20%. The fair value of net assets of the entity at current
year-end was P10,000,000. What is the acquisition cost of the entity?
A. 16,400,000 B. 14,000,000 C. 14,400,000 D. 15,200,000
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