Which of the following is not an important step when calculating earnings using the excess earnings method?
A) Calculate adjusted tangible net worth.
B) Estimate value of intangibles.
C) Compute extra earning power.
D) Calculate the pay of the Chief Executive Officer.
E) Estimate the opportunity cost of investing in the business.

Question

Quizplus · Accepted Answer

Calculating the pay of the Chief Executive Officer is not a relevant step when using the excess earnings method to calculate earnings. The other options (A, B, C, and E) are all important steps in the calculation process.

Which of the Following Is Not an Important Step When