15. Place Company started construction of a new office building on January 1, 2014, and moved into the f building on July 1, 2015. Of the building's $5,000,000 total cost, $4,000,000 was incurred in 2014 evenly throughout the year. Place's incremental borrowing rate was 12 percent throughout 2014, and the total amount of interest incurred by Place during 2014 was $204,000, What amount should Place report as capitalized interest at December 31, 2014? a. $480,000 b. $240,000 c. $300,000 d. $204,000 16. On April 30, 2017, Jefferson, Inc. purchased for $30 per share all 200,000 of Madison Corp's outstanding common stock. On this date Madison's balance sheet showed net assets of $5,000,000. Additionally, the fair value of Madison's identifiable assets on this date was $400,000 in excess of their carry ing amount. On Jefferson's April 30, 2017, consolidated balance sheet, what amount should be reported as goodwill:? a. $350,000 b. $400,000 c. $600,000 d. $1,000,000 17. In a-basket or' lump-sum" purchase of assets, which of the following best describes the process by which the historical cost of the various assets acquired should be determined? a. Allocation of the total cost to the individual assets on the basis of the fair market value of the individual assets at the time of the "basket" purchase b. Recording of the individual assets at their current value with recognition of a gain or loss for the difference between the price paid for the assets and the current value of the individual asscts. c. Recording of the individual assets at their original historical cost to the seller with a gain or loss recognized as the difference between the total of the original historical cost figures and the price paid in the basket purchase d. Allocation of the total cost to the individual assets on the basis of the historical cost of the individual assets to their original owner. 18. In a period of falling prices, the use of which of the following inventory cost flow methods would ty pically result in the highest cost of goods sold? a. FIFO b. LIFC c. Weighted average cost d. Specific identification Pierce Retailers purchased merchandise with a list price of $100,000, subject to a trade discount of 20 percent and credit terms of 2/10, n/30. At what amount should Picrce record the cost of this merchandise if the gross method is used? a. $80,000 b. $98,000 c. $78,400 d. $100,000 19
