Question

What special asset does Heartland Telecom's acquisition of Surety Wireless​ identify? The acquisition identifies the asset goodwill . How should Heartland Telecom account for this asset after acquiring Surety ​Wireless? Explain in detail. Heartland Telecom should measure the ▼ of this asset each year. If this asset has increased in​ value, Heartland should ▼ . If the value of the asset has​ decreased, Heartland should

Answer 1

Answer: 1. Goodwill

2. a. Record no entry in the books

b. Record a loss in the books

Step-by-step explanation:

1. The Special asset created by Heartland Telecom's acquisition of Surety Wireless is Goodwill.

Goodwill is the difference between what the company was worth and what it was purchased for if the purchase price was higher than the worth (market value).

2. a. Goodwill should be accounted for by recoding it in the Long term Assets under Intangible Assets in the balance sheet. It should not be amotrized. If Goodwill increases, there should be no recording this gain on the books.

b. If the value of the asset has​ decreased, Heartland should record a loss in the books to represent the loss on this account.