The Owners of Dallas Electronics Store Are Contemplating Selling the Business

question 40

Multiple Choice

The owners of Dallas Electronics Store are contemplating selling the business. The cumulative earnings for the past 5 years totalled $ 900,000, including a gain on discontinued operations 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.