Instructions
a. Compute an estimated fair value for any goodwill associated with Kivi purchasing Joe’s
Garage. Base your computation upon an assumption that successful service stations typically
sell at about 9.25 times their annual earnings.
b. Compute an estimated fair value for any goodwill associated with Kivi purchasing Gas N’ Go.
Base your computation upon an assumption that Kivi’s management expects excess earnings
to continue for four years.
c. Many of Kivi’s existing service stations are extremely profitable. If Kivi acquires Joe’s
Garage or Gas N’ Go, should it also record the goodwill associated with its existing locations?
Explain.
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here