Central States 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 Central States’ transactions during the year.
2. What special asset does Central States’ acquisition of Swift Wireless identify? How should Central States Telecom account for this asset after acquiring Swift Wireless?
Explain in detail.

Transcribed Image Text:

Mar. 28 July 1 Aug. 1 Dec. 31 Central States purchased Swift Wireless Company for $280,000 cash plus a $420,000 note payable. Swift's book value of assets was $700,000. Swift's market value of assets and liabilities was $1,200,000 and $510,000, respectively. Paid $62,000 to acquire a patent. Central States believes the patent's useful life will be eight years. Paid $240,000 for the trademark, "Fast as Lightning," with a useful life of 16 years. Recorded amortization expense (separately) for the patent and trademark.