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Antlers Company adopted the dollar-value LIFO retail method at…

7. Antlers Company adopted the dollar-value LIFO retail method at the beginning of 20Y1 (base year). The retail price index at the end of 20Y1 was 10%. The following data applies to Antlers inventory:


Cost Retail
Beginning Inventory $36,000 $72,000
Plus: Net Purchases $60,000 $90,000
Plus: Net Markups   $30,000
Less: Net Markdowns .                 . (20,000)
Less: Net Sales  (62,000)
Estimated Ending Inventory       $110,000


What is the inventory balance that Antlers would report in its 12/31/20Y1 balance sheet?


8.  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 was $7,800,000. The fair values of all Smith’s assets and liabilities were equal to their book values with the following exceptions:


  Book Value Fair Value
Receivables $1,300,000 $1,100,000
Building $8,000,000 $9,400,000
Intangible Assets $200,000 $1,200,000


Calculate the amount Johnson should record as goodwill as a result of the transaction.


9. On January 1, 20Y1, Myner Corporation purchased a used machine. Myner paid $50,000 down and signed a noninterest-bearing note requiring $250,000 to be paid on 12/31/20Y3. The fair value of the machine is not determinable. An interest rate of 8% properly reflects the time-value of money for this type of loan agreement. At what amount should Myner record the acquisit?


11. On June 1, 20Y1, Cricket Company began construction of a new factory. The factory was completed on October 31, 20Y2. Expenditures on the project were as follows:


July 1, 20Y1 $54,000
October 1, 20Y1 $22,000
February 1, 20Y2 $30,000
April 1, 20Y2 $21,000
September 1, 20Y2 $20,000
October 1, 20Y2 $6,000


On July 1, 20Y1, Cricket obtained a $700,000 construction loan with a 6% interest rate. The loan was outstanding through the end of October, 20Y2. The company’s only other interest-bearing debt was a long-term note for $100,000 with an interest rate of 8%. This note was outstanding during all of 20Y1 and 20Y2. The company’s fiscal year-end is December 31. What is the amount of interest that Cricket should capitalize in 20Y1, using the specific interest method?