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 the 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 в. 14,000,000 C. 14,400,000 р. 15,200,000
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 the 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 в. 14,000,000 C. 14,400,000 р. 15,200,000
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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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 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 the 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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2af8e892-e98a-4697-9002-51ffea988eb2%2Fe64f7b12-9090-4aa8-ae6a-47e99acdc823%2F6bvo2nr_processed.png&w=3840&q=75)
Transcribed Image Text: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 the 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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