P10-32A Recording lump-sum asset purchases, depreciation, and disposals

Sep. 1 Gain $193,250

Ellie Johnson Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each depreciable asset. During 2018, Ellie Johnson Associates completed the following transactions:

Jan. 1Purchased office equipment, $113,000. Paid $80,000 cash and financed the remainder with a note payable.

Apr. 1Acquired land and communication equipment in a lump-sum purchase. Total cost was $310,000 paid in cash. An independent appraisal

valued the land at $244,125 and the communication equipment at $81,375.

Sep. 1Sold a building that cost $520,000 (accumulated depreciation of $285,000 through December 31 of the preceding year). Ellie Johnson

Associates received $420,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a

40-year useful life and a residual value of $25,000.

Dec. 31Recorded depreciation as follows: Communication equipment is depreciated by the straight-line method over a five-year life with zero

residual value.

Office equipment is depreciated using the double-declining-balance method over five years with a $1,000 residual value.

Record the transactions in the journal of Ellie Johnson Associates.

P10-38B Recording lump-sum asset purchases, depreciation, and disposals

Sep. 1 Gain $163,250

Whitney Plumb Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each asset. During 2018, Whitney Plumb completed the following transactions:

Jan. 1Purchased office equipment, $117,000. Paid $77,000 cash and financed the remainder with a note payable.

Apr. 1Acquired land and communication equipment in a lump-sum purchase. Total cost was $350,000 paid in cash. An independent appraisal

valued the land at $275,625 and the communication equipment at $91,875.

Sep. 1Sold a building that cost $520,000 (accumulated depreciation of $285,000 through December 31 of the preceding year). Whitney

Plumb received $390,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-

year useful life and a residual value of $25,000.

Dec. 31Recorded depreciation as follows: Communication equipment is depreciated by the straight-line method over a five-year life with zero

residual value. Office equipment is depreciated using the double-declining-balance method over five years with a $2,000 residual value

Record the transactions in the journal of Whitney Plumb Associates.

P10-40B Accounting for intangibles

Goodwill $210,000

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 assets1,000,000

Market value of liabilities510,000

1. Journalize the entry to record Core's purchase of Surety Wireless for $280,000 cash plus a $420,000 note payable.

2. 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.