Hi! I'd be happy to help you prepare the journal entry for the purchase of the trade name, customer list, and manufacturing equipment by Blue Spruce Corporation.
First, we need to allocate the lump sum payment of $792,000 among the three assets based on their fair market values. The total fair market value of the assets is $317,120 + $327,030 + $346,850 = $991,000.
Next, we'll find the allocation percentages for each asset:
Trade Name: $317,120 / $991,000 = 32%
Customer List: $327,030 / $991,000 = 33%
Equipment: $346,850 / $991,000 = 35%
Now, we'll allocate the $792,000 based on these percentages:
Trade Name: $792,000 x 32% = $253,440
Customer List: $792,000 x 33% = $261,360
Equipment: $792,000 x 35% = $277,200
Finally, we'll prepare the journal entry:
Account Titles and Explanation Debit Credit
Intangible Assets - Trade Name $253,440
Intangible Assets - Customer List $261,360
Equipment $277,200
Cash $792,000 (credit)
As for the initial operating losses of $14,500, they should be recorded separately as an expense and do not affect the journal entry for the asset purchase.