E 10-5 Freitas Corporation was organized early in 2016. The following expenditures were

E 10-5 Freitas Corporation was organized early in 2016. The following expenditures were

made during the first few months of the year:

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Required:

  Make a summary journal entry to record the $107,000 in cash expenditures.

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E 10-6

On March 31, 2016, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows:

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Required:

Calculate the amount paid for goodwill.

E 10-7

Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $7,800,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions:

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Required:

Calculate the amount paid for goodwill.

E 10-26

On January 1, 2016, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2017. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2016:

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Construction expenditures incurred during 2016 were as follows:

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Required:

Calculate the amount of interest capitalized in 2016 for the building using the specific interest method.