2. A company has the following expenditures during the year.

Advertising	$	100,000
Employee training		80,000
Customer outreach and consultation		50,000

The company believes that these efforts have increased the fair value of the entire company by $325,000. How much goodwill can the company recognize at the end of the year associated with these expenditures?

a. $0

b. $80,000

c. $230,000

d. $325,000

3. Braxwell Corporation acquired the following assets associated with a manufacturing facility for a lump-sum price of $9,000,000. According to independent appraisals, the fair values were $4,000,000, $2,000,000, $3,000,000, and $1,000,000 for the building, patent, land, and equipment, respectively. The initial value of the patent would be:

a. $2,000,000

b. $2,250,000

c. $1,800,000

d. $0

4. On July 1, 2018, Markwell Company acquired equipment. Markwell paid $160,000 in cash on July 1, 2018, and signed a $640,000 noninterest-bearing note for the remaining balance which is due on July 1, 2019. An interest rate of 5% reflects the time value of money for this type of loan agreement.

For what amount will Markwell record the purchase of equipment?

a. $761,905

b. $769,523

c. $609,523

d. $800,000

5. Assets acquired by the issuance of equity securities are valued based on:

a. Their fair values.

b. The fair value of the equity securities.

c. The fair value of the assets acquired or the fair value of the equity securities, whichever is more reasonably determinable.

d. The fair value of the assets acquired or the fair value of the equity securities, whichever is smaller.

6. On June 17, the Lattern Company issued 120,000 shares of its $0.10 par value common stock in exchange for land. On the date of the transaction, the fair value of the common stock, evidenced by its market price, was $10 per share. The journal entry to record this transaction includes:

a. debt: land $1,200,000

b. Credit: cash $1,200,000

c. debit: land $12,000

d. no entry for this exchange

7. A company receiving a donated asset will record:

a. an increase in revenue

b. an increase in liabilities

c. a decrease in liabilities

d. an increase in revenue and a decrease in liabilities

8. Alamos Co. exchanged equipment and $17,500 cash for similar equipment. The book value and the fair value of the old equipment were $81,800 and $90,300, respectively.

Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:

a.$0

b. $8,500

c. $26,000

d. $(8,500)

9. On January 1, 2018, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:

January 1, 2018	$	200,000
September 1, 2018	$	300,000
December 31, 2018	$	300,000
March 31, 2019	$	300,000
September 30, 2019	$	200,000

Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2018. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2018 and 2019. Average accumulated expenditures for 2018 was:

a. $300,000

b. $350,000

c. $500,000

d. $400,000

10. On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:

January 1, 2018	$	323,000
September 1, 2018	$	483,000
December 31, 2018	$	483,000
March 31, 2019	$	483,000
September 30, 2019	$	323,000

Dreamworld had $6,100,000 in 15% bonds outstanding through both years. Dreamworld's capitalized interest in 2018 was:

a. $84,712

b. $48,450

c. $72,600

d. $96,900

11. Software development costs are capitalized if they are incurred:

a. Prior to the point at which technological feasibility has been established.

b. after commercial production has begun

c.After technological feasibility has been established but prior to the product availability date.

d. none of these answers

12.Cebrex Software began a new development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000. The economic life of the software is estimated at four years. For what amount will software be capitalized in 2018?

a. $0

b. $5,600,000

c. $1,400,000

d. $3,200,000