Chapter 3
Long-Term Assets
105
AP-12A (
6
)
John Partington purchased assets ($500,000) and liabilities ($400,000) of a company, for which
he paid $150,000 on August 6, 2016. The company owns the rights to a unique product.
Required
a) Record the purchase transaction.
Date
Account Title and Explanation
Debit
Credit
b) Subsequent to the purchase of the company, a competitor appeared. On December 31,
2016, John assessed that the value of the goodwill that his company owned was now
worth $20,000. Record the appropriate journal entry to reflect the reduction in the value
of goodwill.
Date
Account Title and Explanation
Debit
Credit
