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Estimate goodwill for this transaction using capitalization

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Reference no: EM132864729

Lopez Company is contemplating the acquisition of Scott Company. Lopez determines that the fair market value of Scott's identifiable net assets (total assets less total liabilities) is $6,528,300. For this specific industry, 8% is considered a normal rate of return on net assets. Scott's earnings for the past few years have averaged $694,200.

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Problem 1: Estimate goodwill for this transaction using the capitalization of excess earnings method.

Reference no: EM132864729

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