Frosty Corp.'s average annual net income is $75,000 above the average for Frosty's industry.Casper is interested in purchased Frosty.Assuming Casper estimates goodwill by capitalizing excess earnings at 14%, the estimated goodwill (to the nearest dollar)is
A)$1,050,000.
B)$954,333.
C)$535,714.
D)$ 0.

Question

Quizplus · Accepted Answer

The Answer of Frosty Corp.'s average annual net income is $75,000 above the average for Frosty's industry.Casper is interested in purchased Frosty.Assuming Casper estimates goodwill by capitalizing excess earnings at 14%, the estimated goodwill (to the nearest dollar)is
A)$1,050,000.
B)$954,333.
C)$535,714.
D)$ 0.