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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
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Phoniex University
Oct-2001 - Nov-2016
E7-40B (Learning Objectives 5, 6: Compute and account for goodwill and impairment) Assume Doltron paid $19 million to purchase Northeast.com. Assume further that Northeast had the following summarized data at the time of the Doltron acquisition (amounts in millions):
Â
 Northeast.com Assets                                           Liabilities and Equity |
 |
||||
 |
Current assets ..................... |
$11 |
Total liabilities ..................... |
$22 |
 |
 |
Long-term assets ................. |
  27 |
Stockholders’ equity ............. |
  16 |
 |
 |
 |
$38 |
 |
$38 |
 |
 |
 |
 |
 |
 |
 |
Â
Northeast’s long-term assets had a current market value of only $25 million.
â–¶ Requirements
1. Compute the cost of goodwill purchased by Doltron.
2. Journalize Doltron’s purchase of Northeast.
3.   Explain how Doltron will account for goodwill.
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