Score: 0 of 1 pt P9-34A (similar to) Central States Telecom pro ides communicati

Question

Score: 0 of 1 pt P9-34A (similar to) Central States Telecom pro ides communication ser ces i, Iowa, Nebraska, the Dakotas, and Montana Central States Telecom purchased goodwil as part of the acquisition o Samson Wreless Enterprises, which had th?folown 4 2 of3 (0 complete) HW Score: 0%, 0 of 6 pts EQuestion Help igures (Cick the icon to view the data) Read the tearement Requirement 1. Joumalize the entry to record Central State Telecom's purchase of Samson Wireless for $400,000 cash plus a $600,000 note payable. (Record debits first, then credts Select the explanation on the last line of the journal entry table) Date Accounts and Explanation Debit Credit Data Table Requirements Book value of assetsT00,000 Market value of assets Market value of labilities 1,300,000 540,000 1. Jounalize the entry to recond Central State Telecoms purchase of Samson Wireless for $400,000 cash plus a $600,000 note payable 2. What special asset does Central State Telecoms acquisition of Samson Wireless idensty? How should Central States Tellecom account for this asse ater acquiting Samson Wireless? Explain in detail Print Done Choose from any ist or enter any number in the input ftelds and then clck Check Print Done

Explanation / Answer

Solution:

1) Preparing the Journal Entry to Record the Central State Telecom's Purchase of Samson Wireless:

Central State Telecom Acquired Samson Wireless Enterprises for $400,000 in Cash and $600,000 for Notes Payable. Therefore, the Total Purchase Price of the Samson Wireless Enterprises is ($400,000 + $600,000) = $1,000,000. Book Value of assets of Samson is $700,000 and the Market Value of Assets is $1,300,000, Market Value of liabilities $540,000.

The following is the Calculation of the Goodwill:

2) The Special Asset that is identified is Goodwill with Positive Balance. The Positive Balance of the Goodwill indicates that the Cost of Acquisition is higher than the Market Value of the Assets and Liabilities Acquired.

Particulars Amount Amount Purchase Price to Acquire Samson Wireless Enterprises $1,000,000 Market Value of Assets $1,300,000 Less: Market Value of Liabilities $540,000 Market Value of Net Assets of Samson ($760,000) Goodwill $240,000

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