Journalize the entry to record midlands purchase

Reference no: EM13701204

Accounting for intangibles

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

Book value of assets $ 750,000
Market value of assets 1,000,000
Market value of liabilities 530,000

Requirements

1. Journalize the entry to record Midland's purchase of Shipley Wireless for $320,000 cash plus a $480,000 note payable.

2. What special asset does Midland Telecom account for this asset after acquiring Shipley wireless? Explain in details.

Requirement 1

Purchase price to acquire Shipley Wireless

Market value of Shipley Wireless's assets

Less: Shipley Wireless's liabilities

Market value of Shipley Wireless's net assets

Goodwill

Requirement 2

What special asset does Midland's acquisition of Shipley Wireless identify? How should Midland Telecom account for this asset after acquiring Shipley Wireless?

Explain in detail.

Reference no: EM13701204

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