Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 11, Problem 11.28E
Medifast | Book Value | Fair Value |
Cash | $ 36,000 | $ 36,000 |
Receivables | 100,437 | 100,400 |
Manufacturing equipment | 640,275 | 654,234 |
Patents (remaining life 10 years) | 60,000 | 854,000 |
Trademarks | 14,652 | 187,450 |
Payables | 58,902 | 58,902 |
Required
- a. What is the amount of goodwill acquired?
- b. What intangible assets are acquired? Which of the intangibles have an indefinite life? Which will be amortized? What will the amortization expense be in the year after acquisition?
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Accounting for intangibles
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:
Requirements
Journalize the entry to record Core’s purchase of Surety Wireless for $280,000 cash plus a $420,000 note payable.
What special asset does Core’s acquisition of Surety Wireless identify? How should Core Telecom account for this asset after acquiring Surety Wireless? Explain in detail.
Identifiable Intangibles and Goodwill
Prince Corporation acquires Squire Service Corporation for one million shares of Prince stock, valued at $35 per share. Squire is merged into Prince, although it continues to do business under the Squire Service name. Professional fees connected with the acquisition are $1,200,000 and costs of registering and issuing the new shares are $600,000, both paid in cash. Squire
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Chapter 11 Solutions
Intermediate Accounting
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