Problemcafe ole company aquired a fast food resturant for, Ask an Expert

Accounting

Problem:

Cafe Ole Company aquired a fast food resturant for $1,500,000. The fair market values of the assets acquired were as follows. No liabilites assumed.

Equipment= $380,000

Land= $200,000

Building= $680,000

Franchise (5year life) =$120,000

Required:

Question 1: Calculate the amount of goodwill acquired.

Question 2: Prepare the journal entry to record the amortization of the franchise fee at the end of year 1.

Note: Provide support for your rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165870

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