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Jazz company started construction on a building on January 1 of this year and completed construction on December 31 of the same year.

1. Jazz company started construction on a building on January 1 of this year and completed construction on December 31 of the same year. Jazz had only two interest notes outstanding during the year, and both of these notes were outstanding for all 12 months of the year. The following information is available:What amount of interest should Jazz capitalize for the current year?
Average accumulated expenditures ..................... $250,000
Ending balance in construction in progress
before capitalization of interest .................. 360,000
6 percent note incurred specifically for the project . 150,000
9 percent long-term note ............................. 500,000

A $15,000
B $18,000
C $22,500
d $27,900

2,On July 31, 2011, Cleveland Company purchased for $4,000,000 cash all of the outstanding common stock of Gem Company when Gem's balance sheet showed net assets of $3,200,000. Gem's assets and liabilities had fair values different from the book values as follows:
Book Value Fair Value
Property, plant, and equipment,
net ...........................
$5,000,000
$5,750,000
Other assets .................... 500,000 0
Long-term debt .................. 3,000,000 2,800,000
As a result of the transaction, what amount will be shown as goodwill in the July 31, 2011, consolidated balance sheet of Cleveland Company and its wholly owned subsidiary, Gem Company?
A $350,000
B $250,000
C $750,000
D $800,000

3.Donated equipment for which the fair value has been determined should be recorded as a debit to the appropriate equipment account and a credit to
A Other Income.
B Retained Earnings.
C Capital Stock.
D Revenue or Gain.

4. Goodwill should be recorded in the accounting records only when
A it is purchased from another company.
B it can be established that a definite benefit or advantage has resulted to a firm from some item such as a good name, capable staff, or reputation.
C it is acquired through the purchase of another business entity.
D a firm reports above normal earnings for five or more consecutive years.

5.In a business combination, goodwill is defined as the excess of cost over the
A fair value of assets acquired.
B fair value of assets acquired less the liabilities assumed.
C book value of assets acquired less the liabilities assumed.
D net book value of assets acquired.

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1. Jazz company started construction on a building on January 1 of this year and completed construction on December 31 of the same year. Jazz had only two interest notes outstanding
during the...

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