Calculation of Goodwill
Saje Corporation's Pre-Tax Accounting Income of Lush Industries Ltd

question 90

Essay

Calculation of goodwill
Saje Corporation's pre-tax accounting income of $ 726,000 for the year 2020 included the following items:
$\begin{array}{llcc} \text {Amortization of identifiable intangibles } & \$140,000 \\ \text { Depreciation of building } &119,000\\ \text { Loss from discontinued operations} &46,000\\ \text { Unusual, non-recurring gains } &157,000\\ \text { Profit-sharing payments to employees } &69,300\\\end{array}$
Lush Industries Ltd. would like to purchase Saje Corporation. In trying to measure Saje's normalized earnings for 2020, Lush determines that the building's fair value is triple the book value and that its remaining economic life is double the life that Saje is using. Lush would continue the profit-sharing payments to employees, with the payments being based on income from continuing operations before amortization and depreciation.
Instructions
Calculate the 2020 normalized earnings amount of Saje Corporation that Lush would use to calculate goodwill.

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Definitions:

Manager's Choice

Decisions made by a manager or leader within an organization, often involving strategic selections or directions for a team or project.

Mediator Flexibility

The ability of a mediator to adapt their strategies and approaches based on the evolving dynamics and needs of the negotiation process.

Socio-emotional Experts

Professionals specialized in understanding and managing the social and emotional aspects of human behavior, often involved in counseling, psychology, or social work.

Instrumental Experts

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