ACME Example Adjusted Net Book Value

Question 1

What is the formula for Adjusted Net Book Value?

Answer 1

Book Value of Shareholders Equity
(Net Book Value of Capital Assets)
Fair Market Value of Land
Fair Market Value of Building
Value in Use of Equipment
(Book Value of Goodwill)
Book Value of Long-Term Debt
(Fair Market Value of Long-Term Debt)
Book Value of Future Income Taxes
(Tax Shield Forgone)
Adjusted Net Book Value

Question 2

Calculate NRV of Redundant Assets

Answer 2

Fair market value of redundant land
(Commission @ 5%)
Net proceeds of disposition
(Adjusted Cost Base)
Capital Gains
Taxable Capital Gains (50% of Capital Gains)
Tax Rate
Income Taxes Payable
Net Proceeds of Disposition
(Income Taxes Payable) 
Net Realizable value of redundant land

Question 3

Calculate Implied Goodwill

Answer 3

Fair market value of shares
(Less: net realizable value of redundant land)
Going concern value of shares
(Adjusted Net Book Value)
Implied Goodwill