Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 42

Jell Stores is considering expanding its operations to include the greater Portsmouth area.ather than build new stores in Portsmouth, management plans to acquire existing stores and convert them into Jell outlets.
Jell is evaluating two similar acquisition opportunities.nformation relating to each of these stores is presented below:

Instructions
a.ompute an estimated fair value for any goodwill associated with Jell purchasing Missy's.ase your computation upon an assumption that successful stores of this type typically sell at about 10 times their annual earnings.
b.ompute an estimated fair value for any goodwill associated with Jell purchasing Mell's.ase your computation upon an assumption that Jell's management wants to generate a target return on investment of 35 percent.
c.any of Jell's existing stores are extremely profitable.f Jell acquires Missy's or Mell's, should it also record the goodwill associated with its existing locations Explain.