Chapter 3
Long-Term Assets
124
AP-9B (
6
)
On September 1, 2015, Pat Jarvis purchased assets ($492,000) and liabilities ($422,000) of a
company, for which he paid $200,000. The extra amount was paid because the company sells
a superior 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 August 31, 2016,
Pat assessed the value of the goodwill that his company owned was now worth $113,000.
Record the appropriate journal entry to reflect the reduction in the value of goodwill.
Date
Account Title and Explanation
Debit
Credit
