Prepare the july entry for brandon corporation

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Question - Accounting for Goodwill

On July 1, 2010, Brandon Corporation purchased Mills Company by paying $250,000 cash and issuing a $150,000 note payable to Steve Mills. At July 1, 2010, the balance sheet of Mills Company was as follows:

Cash

$50,000

Accounts Payable

$200,000

Accounts Receivable

90,000

Stockholder's equity

235,000

Inventory

100,000



Land

40,000



Building (net)

75,000



Equipment (net)

70,000



Trademarks

10,000




$435,000


$435,000

The recorded amounts all approximate current values except for land (fair value of $80,000), inventory (fair value of $125,000), and trademarks (fair value of $15,000).

Prepare the July 1 entry for Brandon Corporation to record the purchase.

Prepare the December 31 entry for Brandon Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,000.

Reference no: EM131817576

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