in the problem it says the excess over book value is allocated to undervalued assets 416565
In the problem it says the excess over book value is allocated to undervalued assets and goodwill. Here is how I calculated the excess:
Implied FV =260k/80%= 325,000
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in the problem it says the excess over book value is allocated to undervalued assets 416565
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BV (130k+120k)=250,000
Excess= 75,000
The difference between PPE mkt and book is 95,000 overvalued.
My question is:
1) Did I calculate the excess correctly?
2) Why is the PPE excess larger than the total excess and where is the goodwill?
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