The Owners of Dallas' Electronics Store Are Contemplating Selling the Business

question 36

Multiple Choice

The owners of Dallas' Electronics Store are contemplating selling the business to new interests.The cumulative earnings for the past 5 years amounted to $900,000 including extraordinary gains of $30,000.The annual earnings based on an average rate of return on investment for this industry would have been $138,000.If excess earnings are to be capitalized at 15%, then implied goodwill should be

• A)$210,000.
• B)$280,000.
• C)$240,000.
• D)$870,000.

---

Definitions:

Depreciation Tables

Charts provided by the IRS to assist taxpayers in calculating the depreciation expense of an asset for tax purposes over its useful life.

Four-Plex

A residential building divided into four separate units or apartments, each functioning as a separate dwelling.

Net Rental Income

The profit derived from renting out property after deducting all allowable expenses related to the rental activity.

Standard Mileage Rate

The Standard Mileage Rate is a set rate per mile established by the IRS that taxpayers can use to calculate deductible vehicle expenses for business, medical, moving, or charitable purposes.