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XYZ company is considering the acquisition of R company early in 2019. XYZ believes that an average of the prior 5 years earnings represent a
XYZ company is considering the acquisition of R company early in 2019. XYZ believes that an average of the prior 5 years earnings represent a fair estimate of annual earnings for the indefinite future and that goodwill is determined by capitalizing excess earnings. XYZ also believes that it must earn a 25% return on its investment. The assets of R company include buildings with a fair value 15% higher than book value and the annual depreciation on buildings was $450000. The fair value of net assets of R company was $6000000 and the estimated goodwill was $500000. If the normal earning of R company for similar Firms was $1200000, then answer ( 20,21,22,23) The total additional .21 depreciation that should be
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