Central States Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Central States purchased goodwill as part of the acquisition of Shurburn Wireless Company, which had the following figures:
Book value of assets ..... $ 750,000
Market value of assets ..... 1,000,000
Market value of liabilities .. 560,000
1. Journalize the entry to record Central States’s purchase of Shurburn Wireless for $360,000 cash plus a $540,000 note payable.
2. What special asset does Central States’s acquisition of Shurburn Wireless identify? How should Central States Telecom account for this asset after acquiring Shurburn Wireless? Explain in detail.