P10-34A Accounting for intangibles Midland States Telecom provides communication services in lowa, Nebraska, the Dakotas, and Montana. Midland States Telecom purchased goodwill as part of the acquisition of Sheldon Wireless Enterprises, which had the following figures: Book value of assets Market value of assets Market value of liabilities $900,000 1,400,000 530,000 Requirements 1. Journalize the entry to record Midland States Telecom's purchase of Sheldon Wireless for $440,000 cash plus a $660,000 note payable. 2. What special asset does Midland States Telecom's acquisition of Sheldon Wireless identify? How should Midland States Telecom account for this asset after acquiring Sheldon Wireless? Explain in detail. Requirement 1 Purchase price to acquire Sheldon Wireless ($440,000 + $660,000) Market value of Sheldon Wireless's assets Less: Sheldon Wireless's liabilities Market value of Sheldon Wireless's net assets Goodwill Date Accounts and Explanation Debit Credit Assets Goodwill 1,400,000 230,000 Liabilities Cash Note Payable 530,000 440,000 660,000 To record purchase of Sheldon Wireless. Requirement 2 The acquisition identifies the asset goodwill. 37 Chapter 9 | P10-34A Chapter 10