Core Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Core purchased goodwill as part of the acquisition of Surety Wireless Company,which had the following figures:
Book value of assets $ 700,000
Market value of assets 1,000,000
Market value of liabilities 510,000
1. Journalize the entry to record Core’s purchase of Surety Wireless for $280,000 cashplus a $420,000 note payable.
2. What special asset does Core’s acquisition of Surety Wireless identify? How shouldCore Telecom account for this asset after acquiring Surety Wireless? Explain in detail
Goodwill is $210,000
The assets that increase the value of the business organization even without physical existence are known as intangible assets. Goodwill and patents are some of the intangible assets.
(To record the purchase of business)
Core Telecom will identify goodwill on the acquisition of Surety wireless company. This goodwill arises because core has paid an amount of consideration that is more than the market value of the net assets of the Sheldon wireless.
Core Telecom will report goodwill of $210,000 on the balance sheet.
This problem continues the Canyon Canoe Company situation from Chapter 8. Amber and Zack Wilson are continuing to review business practices. Currently, they are reviewing the company’s property, plant, and equipment and have gathered the following information:
Estimated Residual value
Monthly Depreciation Expense
Nov. 3, 2018
Dec 1, 2018
Dec 1, 2018
Dec 2, 2018
Mar. 2, 2019
MAR. 3, 2019
*SL = Straight@line; DDB = Double@declining@balance
1. Calculate the amount of monthly depreciation expense for the computer and office furniture for 2019.
2. For each asset, determine the book value as of December 31, 2018. Then, calculate the depreciation expense for the first six months of 2019 and the book value as of June 30, 2019.
3. Prepare a partial balance sheet showing Property, Plant, and Equipment as of June 30, 2019.
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