Question 5:

A:

Crane Company issues $4900000, 4%, 5-year bonds dated January 1, 2020 on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 3%. What are the proceeds from the bond issue?

ff	1.5%	2.0%	3%	4%
Present value of a single sum for 5 periods	0.92826	0.90573	0.86261	0.82193
Present value of a single sum for 10 periods	0.86167	0.82035	0.74409	0.67556
Present value of an annuity for 5 periods	4.78264	4.71346	4.57971	4.45182
Present value of an annuity for 10 periods	9.22218	8.98259	8.53020	8.11090

$5124457

$4900000

$5123642

$5125957

B:

Cullumber Corporation purchased a patent for $118500 on September 1, 2019. It had a useful life of 10 years. On January 1, 2021, Cullumber spent $22000 to successfully defend the patent in a lawsuit. Cullumber feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2021?

$25730.

$23360. $24940.

$20540.

C:

Sandhill Companys 12/31/21 balance sheet reports assets of $12400000 and liabilities of $5080000. All of Sandhills assets book values approximate their fair value, except for land, which has a fair value that is $880000 greater than its book value. On 12/31/21, Egbert Corporation paid $12560000 to acquire Sandhill. What amount of goodwill should Egbert record as a result of this purchase?

$0

$160000

$4360000

$5240000

D: On January 1, 2020, Ann Price loaned $226672 to Joe Kiger. A zero-interest-bearing note (face amount, $310000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this type is 11%. The present value of $310000 at 11% for three years is $226672. What amount of interest income should Ms. Price recognize in 2020?

$102300.

$24934.

$83650.

$34100.