The notes to a recent annual report from Suzies Shoe Corporation indicated that the company acquired another company, Steves Shoes, Inc.

Assume that Suzies acquired Steves Shoes on January 5 of the current year. Suzies acquired the name of the company and all of its assets for $750,000 cash. Suzies did not assume the liabilities. The transaction was closed on January 5 of the current year, at which time the balance sheet of Steves Shoes reflected the following book values. An independent appraiser estimated the following market values for the assets.

Steves Shoes, Inc.
January 5 of the Current Year	Book Value				Market Value
Accounts receivable (net)		$	50,000			$	50,000
Inventory			385,000				350,000
Fixed assets (net)			156,000				208,000
Other assets			4,000				10,000
Total assets		$	595,000
Liabilities		$	75,000
Stockholders equity			520,000
Total liabilities and stockholders equity		$	595,000

2. Compute the adjustments that Suzies Shoes Corporation would make at the end of the current year (ending December 31) for the following items acquired from Steve's Shoes: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a. Depreciation of the fixed assets (straight line), assuming an estimated remaining useful life of 10 years and no residual value.

b. Goodwill (an intangible asset with an indefinite life).

Journal entry worksheet Record the straight-line depreciation of fixed assets, assuming an estimated remaining useful life of 10 years and no residual value. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal Journal entry worksheet Record amortization of the goodwill (an intangible asset with an indefinite life). Note: Enter debits before credits. Transaction General Journal Debit Credit b Record entry Clear entry View general journal