Mia-Tora Company purchased a fast-food restaurant for $1,400,000. The fair market values of the assets purchased were as follows. No liabilities were assumed.
Equipment $320,000
Land $200,000
Building $650,000
Franchise (5-year life) $100,000
A. Calculate the amount of goodwill purchased.
B. Prepare the journal entry to record the amortization of the franchise fee at the end of year 1.