Reference no: EM131595558
Question - Intangibles
Freitas Corporation was organized early in 2016. The following expenditures were made during the first few months of the year:
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Attorney's fees in connection with the organization of the corporation
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$12,000
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State filing fees other incorporation costs
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3,000
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Purchase of a patent
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20,000
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Legal and other fees for transfer of the patent
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2,000
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Purchase of furniture
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30,000
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Pre-opening salaries
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40,000
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Total
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$107,000
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Required: Prepare a summary journal entry to record the $107,000 in cash expenditures.
Question - Goodwill
On March 31, 2016, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney's assets and liabilities were as follows:
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Book Value
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Fair Value
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Current assets
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$6,000,000
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$7,500,000
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Property, plant and equipment
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11,000,000
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14,000,000
|
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Other assets
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1,000,000
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1,500,000
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Current liabilities
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4,000,000
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4,000,000
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Long-term liabilities
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6,000,000
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5,500,000
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Required: Calculate the amount paid for goodwill.
Question - Goodwill
Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith's net assets (assets minus liabilities) was $7,800,000. The fair values of all of Smith's assets and liabilities were equal to their book values with the following exceptions:
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Book Value
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Fair Value
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Receivables
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$1,300,000
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$1,100,000
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Property, plant and equipment
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8,000,000
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9,400,000
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Intangible assets
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200,000
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1,200,000
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Required: Calculate the amount paid for goodwill.
Question - Interest capitalization
On January 1, 2016, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2017. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2016:
$5,000,000, 12% bonds
$3,000,000, 8% long-term note
Construction expenditures incurred during 2016 were as follows:
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January 1
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$600,000
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March 31
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1,200,000
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June 30
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800,000
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September 30
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600,000
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December 31
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400,000
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Required: Calculate the amount of interest capitalized in 2016 for the building using the specific interest method.