Accounting for intangibles [20-25 min]
Heartland Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Heartland purchased goodwill as part of the acquisition of Shurburn Wireless Company, which had the following figures:
Book value of assets....... | $ 800,000 |
Market value of assets..... | 900,000 |
Liabilities......................... | 540,000 |
Requirements
1. Journalize the entry to record Heartland’s purchase of Shurburn Wireless for $360,000 cash plus a $540,000 note payable.
2. What special asset does Heartland’s acquisition of Shurburn Wireless identify? How should Heartland Telecom account for this asset after acquiring Shurburn Wireless? Explain in detail.
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