1) Northern purchased the entire business of Southern including all its assets and liabilities for $2,160,000 on December 31, 2021. Below is information related to the two companies at that date:

Northern Southern

Fair value of assets $3,780,000 $2,880,000

Fair value of liabilities 1,890,000 1,080,000

Reported assets 2,880,000 2,340,000

Reported liabilities 1,800,000 900,000

Net Income for the year 216,000 180,000

How much goodwill did Northern pay for acquiring Southern?

2) Cutter Enterprises purchased equipment for $54,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $5,700.

Using the straight-line method, depreciation for 2022 and the equipment's book value at December 31, 2022, would be:

A. $21,600 and $32,400 respectively.

B. $9,660 and $34,680 respectively.

C. $9,660 and $28,980 respectively.

D. $10,800 and $43,200 respectively.

3) Cutter Enterprises purchased equipment for $90,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $7,500.

Using the double-declining-balance method, depreciation for 2022 would be

A. $3600

B. $19800

C. $21600

D. None of these answer choices are correct

4) Cutter Enterprises purchased equipment for $81,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $4,500.

Using the sum-of-the-years'-digits method, depreciation for 2022 and book value at December 31, 2022, would be:

A. $20,400 and $35,100respectively.

5) An asset was acquired on August 1, 2021, for $24,000 with an estimated five-year life and $1,500 residual value. The company uses straight-line depreciation. Calculate the gain or loss if the asset was sold on April 30, 2023, for $14,000. Partial-year depreciation is calculated based on the number of months the asset is in service.

A. $3375 GAIN

B. $2125 LOSS

C. $6750 GAIN

D. $4500 LOSS

6) Herman Apparel has purchased equipment on January 1, 2018, for $577,000. In 2018-2020, Herman depreciated the asset on a straight-line basis with an estimated useful life of eight years and an $97,000 residual value. In 2021, Herman has started to change its business strategy and now believes that the equipment will be used for only another two years (five years total) but does not believe the residual value has changed. What depreciation would Herman record for the year 2021 on this equipment?

A. $150000

B. $158000

C. $107000

D. $96000

B. $20,400 and $30,600respectively.

C. $21,600 and $27,900respectively.

D. $21,600 and $32,400respectively.