P10-34A Accounting for intangibles 1. Goodwill $330,000

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 asset 1,000,000 Market value of liabilities 530,000 Requirements 1. Journalize the entry to record Midlands purchase of Shipley Wireless for $320,000 cash plus a $480,000 note payable. 2. What special asset does Midlands acquisition of Shipley Wireless identify? How should Midland Telecom account for this asset after acquiring Shipley Wireless?

Explain in detail.

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 Accounts and Explanation To record purchase of Shipley Wireless. Debit Accounts to use for journal entry Credit Assets Goodwill Liabilities Cash Note Payable 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