Give me correct answer with explanation. Sheridan Homes Company is considering the acquisition of Windsor, Inc. early in 2025. To assess the amount, it might be willing to pay,Sheridan Homes makes the following computations and assumptions.A.B.Windsor, Inc. has identifiable assets with a total fair value of $15,001,000 and liabilities of $8,808,000. The assets includeoffice equipment with a fair value approximating book value, buildings with a fair value 30% higher than book value, and landwith a fair value 75% higher than book value. The remaining lives of the assets are deemed to be approximately equal tothose used by Windsor, Inc.Windsor, Inc's pretax incomes for the years 2022 through 2024 were $1,202,300, $1,500,900, and $954,900, respectively.Sheridan Homes believes that an average of these earnings represents a fair estimate of annual earnings for the indefinitefuture. However, it may need to consider adjustments to the following items included in pretax earnings:Depreciation on buildings (each year)964,500Depreciation on equipment (each year)53,500Extraordinary loss (year 2024)304,000Sales commissions (each year)254,300C.The normal rate of return on net assets for the industry is 15%. Assume that Sheridan Homes feels that it must earn a 15% return on its investment, but that average excess earnings are to becapitalized for three years only. Based on these assumptions, calculate a reasonable offering price for Windsor, Inc. Indicate howmuch of the price consists of goodwill. Ignore tax effects. (Round present value factor calculations to 5 decimal places, e.g. 1.25124and final answers to O decimal places e.g. 58,971.)$LAGoodwillOffering priceSave for Later$LAAttempts: 0 of 2 used Submit Answer

The intangible asset that includes intellectual property and brand value of a firm is called…

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 4E: Determination of Acquisition Cost In January 2019, Cordova Company entered into a contract to...

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