Adjustments On August 12, 2005, Sprint acquired all of Nextel, forming Sprint Nextel.
Total consideration paid for the merger was as follows(in millions):
Cash payment to Nextel shareholders ........................................... $ 969
Stock issued to Nextel shareholders ............................................ 35,645
Conversion of Nextel stock-based awards to Sprint Nextel awards ......... 1,124
Total ............................................................................... $37,738
Direct acquisition costs for financial advisory, legal and other services were $78 million. The value of the 1,414 million shares issued was calculated as the average of the closing stock prices on the NYSE for the period two days before through two days after the December 15, 2004 announcement of the merger. The stock had a par value of $2/share. The value of the stock-based awards (employee stock options) was calculated following the requirements of ASC Topic 718. Estimated fair values of Nextel's identifiable net assets as of September 30, 2005, are listed below, as well as purchase price adjustments made in the fourth quarter of 2005.

Required
In answering the following questions, assume the merger was accounted for under current U.S. GAAP.
a. Calculate the amount of goodwill reported on this acquisition, as of September 30,2005.
b. What factors do you believe prompted Sprint to pay a premium over the fair values of Nextel's identifiable net assets (goodwill)?
c. Sprint used prior GAAP to value the shares issued to Nextel's former shareholders. What is current GAAP regarding valuation of stock issued for acquisitions? Discuss the relative merits of prior and current GAAP on this issue.
d. If Sprint recorded this acquisition as a statutory merger, what entry did it make, using September 30, 2005, fair values? Assume direct acquisition costs were paid in cash.
e. Prepare the entry Sprint made to record the fair value changes during the fourth quarter of 2005 as purchase price adjustments occurring during the measurement period

Preliminary Purchase Price Allocation As of As of 12/31/2005 (in millions) 9/30/2005 Adjustments ...5,501 8,454 5,505 8,374 (80) Spectrum licenses and other indefinite life intangibles 14,640 14,640 Customer relationships and other 10,448 2,680 10,448 2,678 definite life intangibles... . (2,902) (8,984) (8,199) (18) 105 (33) 2,920) (8,984) (8,094) Long-term debt.. _. Deferred compensation included in shareholders' equity..** Totals... .. 518 485 $22,267 $22,243