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. $________________.
What will be an ideal response?
$5,865,000
Computations
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