144.Gains and losses in financial statements and tax returnsExplain why the amount of gain or loss resulting from the sale of a depreciable asset usually differs between the seller's financial...

144.Gains and losses in financial statements and tax returns


Explain why the amount of gain or loss resulting from the sale of a depreciable asset usually differs between the seller's financial statements and income tax return. In which of these accounting reports is the gain usually larger (or the loss smaller)? Explain your reasoning.

145.Computation of goodwill


The income of Greystone, Inc., during the last several years has averaged $765,000 annually. The company is now being offered for sale as a going concern. The value of Greystone's net identifiable assets (total assets minus all liabilities) at the present time is $4,675,000.


One of several corporations interested in buying Greystone, offers to pay an amount equal to the value of the net identifiable assets and to assume all liabilities. In addition, this prospective buyer is willing to pay for goodwill an amount equal to net earnings in excess of 10% on net assets, expected to continue four years.


You are to use the above information as a basis for computing the price that the investing corporation will offer for Greystone, Inc. $________________.