Computation of Goodwill:
Assume that an investor purchases 100% of an investee company for $24 million. The fair values of the identifiable net assets are as follows:

Tangible net assets:
Receivables, inventories, PPE, payables, and accruals $8 million
Intangible assets:
Patents, customer lists, trade name, software, etc. $5 million
Research and development assets:
Research projects in process at the investee company $6 million
$19 million

In addition to the purchase price, the investor also incurs acquisition-related costs amounting to $1.8 million for professional fees and the internal allocation of overhead relating to the purchase.
Required:
(a) How much of the purchase price is assigned to Goodwill?
(b) How do we account for Goodwill subsequent to the acquisition?
(c) Given the accounting treatment for Goodwill subsequent to the acquisition, why might companies be motivated to increase the amount assigned to goodwill?

King fisher aviation is evaluating an investment project with the following case flows: $6,000 $5,500 $7,000 $8,000 discount rate 14 percent what is the discounted payback period for these cash flows if the initial cost is 15,000? what if the initial cost is $12,000? what if the cost is $16,000?

Precision dyes is analyzing two machines to determine which one it should purchase. the company requires a rate of return of 15 percent and uses straight-line depreciation to a zero book value over the life of its equipment. ignore bonus depreciation. machine a has a cost of $462,000, annual aftertax cash outflows of $46,200, and a four-year life. machine b costs $898,000, has annual aftertax cash outflows of $16,500, and has a seven-year life. whichever machine is purchased will be replaced at the end of its useful life. which machine should the company purchase and how much less is that machine's eac as compared to the other machine's

Companies in the u.s. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual revenue. in 2011 hertz had 320,000 cars in service and annual revenue of approximately $4.2 billion. the following data show the number of cars in service (1000s) and the annual revenue ($ millions) for six smaller car rental companies (auto rental news website, august 7, 2012). excel file: data14-09.xls if required, enter negative values as negative numbers. a. select a scatter diagram with the number of cars in service as the independent variable. b. what does the scatter diagram developed in part (a) indicate about the relationship between the two variables? c. use the least squares method to develop the estimated regression equation (to 3 decimals). ŷ = + x d. for every additional car placed in service, estimate how much annual revenue will change. by $ e. fox rent a car has 11,000 cars in service. use the estimated regression equation developed in part (c) to predict annual revenue for fox rent a car. round your answer to nearest whole value. $ million hide feedback partially correct