Midtown Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Midtown purchased goodwill as part of the acquisition of Surety Wireless Company, which had the following figures:

Requirements
1. Journalize the entry to record Midtown’s purchase of Surety Wireless for \($440,000\) cash plus a \($660,000\) note payable.
2. What special asset does Midtown’s acquisition of Surety Wireless identify? How should Midtown Telecom account for this asset after acquiring Surety Wireless? Explain in detail.

Transcribed Image Text:

Book value of assets Market value of assets Liabilities 850,000 1,200,000 560,000