Cafe Ole' Company acquired a fast-food restaurant for $1,500,000. The fair market values of the assets acquired were as follows. No liabilities were assumed.
Equipment $380,000
Land $200,000
Building $680,000
Franchise (5-year life) $120,000
Required:
a. Calculate the amount of goodwill acquired
b. Prepare the journal entry to record the amortization of the franchise fee at the end of year 1.