1/ Lake Incorporated purchased all of the outstanding stock of Huron Company paying $955,000 cash. Lake assumed all of the liabilities of Huron. Book values and fair values of acquired assets and liabilities were:

	Book Value				Fair Value
Current assets (net)	$	130,800			$	123,600
Property, plant, equip. (net)		605,000				752,000
Liabilities		151,900				175,000

Lake would record goodwill of:

Multiple Choice

• $79,400.

• $371,100.

• $0.

• $254,400.

2/ Vijay Inc. purchased a three-acre tract of land for a building site for $380,000. On the land was a building with an appraised value of $113,000. The company demolished the old building at a cost of $12,000, but was able to sell scrap from the building for $1,620. The cost of title insurance was $820 and attorney fees for reviewing the contract were $430. Property taxes paid were $3,900, of which $160 covered the period subsequent to the purchase date. The capitalized cost of the land is:

Multiple Choice

• $397,150.

• $267,980.

• $395,370.

• $396,990.

3/ Horton Stores exchanged land and cash of $4,900 for similar land. The book value and the fair value of the land were $88,800 and $101,000, respectively.

Assuming that the exchange lacks commercial substance, Horton would record land-new and a gain/(loss) of:

	Land				Gain/(loss)
a.	$	105,900			$	0
b.	$	105,900			$	12,200
c.	$	93,700			$	0
d.	$	93,700			$	12,200

Multiple Choice

• Option A

• Option B

• Option C

• Option D

4/ Juliana Corporation purchased all of the outstanding stock of Caldwell Inc., paying $4,500,000 cash. Juliana assumed all of the liabilities of Caldwell. Book values and fair values of acquired assets and liabilities were:

	Book Value				Fair Value
Current assets (net)	$	260,000			$	590,000
Property, plant, & equip. (net)		1,570,000				2,070,000
Liabilities		350,000				770,000

Juliana would record goodwill of:

Multiple Choice

• $ 420,000.

• $ 3,120,000.

• $ 7,650,000.

• $ 2,610,000.