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?

Cardinal company is considering a project that would require a $2,725,000 investment in equipment with a useful life of five years. at the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. the company’s discount rate is 14%. the project would provide net operating income each year as follows: sales $2,867,000 variable expenses 1,125,000 contribution margin 1,742,000 fixed expenses: advertising, salaries, and other fixed out-of-pocket costs $706,000 depreciation 465,000 total fixed expenses 1,171,000 net operating income $571,000 1. which item(s) in the income statement shown above will not affect cash flows? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. any boxes left with a question mark will be automatically graded as incorrect.) (a)sales (b)variable expenses (c) advertising, salaries, and other fixed out-of-pocket costs expenses (d) depreciation expense 2. what are the project’s annual net cash inflows? 3.what is the present value of the project’s annual net cash inflows? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 4.what is the present value of the equipment’s salvage value at the end of five years? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 5.what is the project’s net present value? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)