Western Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana and had the following transactions during the year: 

Requirements 

1. Journalize the entry to record Western Telecom’s transactions during the year. 

2. What special asset does Western Telecom’s acquisition of Suiza Wireless Company identify? 

How should Western Telecom account for this asset after acquiring Suiza Wireless Company? Explain in detail.

Transcribed Image Text:

July 1 Aug. 1 Dec. 31 Western Telecom purchased Suiza Wireless Company for $360,000 cash plus a $540,000 note payable. Suiza Wireless Company's book value of assets was $800,000. Suiza Wireless Company's fair value of assets and liabilities was $900,000 and $540,000, respectively. Paid $82,000 to acquire a patent. Western Telecom believes the patent's useful life will be eight years. Paid $230,400 for the trademark "Fast as Lightning" with a useful life of 16 years. Recorded amortization expense (separately) for the patent and trademark.