The notes to a recent annual report from Weebok Corporation included the following: Business Acquisitions During the

Question:

The notes to a recent annual report from Weebok included the following:
Business Acquisitions
During the current year, the Company acquired the assets of Sport Shoes, Inc . . .
Assume that Weebok acquired Sport Shoes on January 5, 2010. Weebok acquired the name of the company and all of its assets, except cash, for $472,000 cash. Weebok did not assume the liabilities. The transaction was closed on January 5, 2010, at which time the of Sport Shoes reflected the following book values and an independent appraiser estimated the following market values for the assets:

The notes to a recent annual report from Weebok Corporation included

Required:
1. Compute the amount of goodwill resulting from the purchase. (Hint: Assets are purchased at market value in conformity with the cost principle.)
2. Compute the adjustments that Weebok would make at the end of the annual accounting period, December 31, 2010, for the following:
a. Depreciation of the fixed assets (straight line), assuming an estimated remaining useful life of 10 years and no residual value.
b. Goodwill (an intangible asset with an indefinitelife).

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...