Question

Midland Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Midland purchased goodwill as part of the acquisition of Shipley Wireless Enterprises, which had the following figures:
Book value of assets ........... $ 750,000
Market value of assets ........... 1,000,000
Market value of liabilities ........ 530,000

Requirements
1. Journalize the entry to record Midland’s purchase of Shipley Wireless for $ 320,000 cash plus a $ 480,000 note payable.
2. What special asset does Midland’s acquisition of Shipley Wireless identify? How should Midland Telecom account for this asset after acquiring Shipley Wireless? Explain in detail.



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  • CreatedJanuary 16, 2015
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