Mia-Tora Company purchased a fast food restaurant for $1,4000,000. The fair market values of the assets purchased were as follows. No liabilities were assumed. (Goodwill Purchased: $130,000)

Equipment: $320,000

Land: $200,000

Building: $650,000

Franchise (5 year life) $100,000


A. Calculate the amount of goodwill purchased.

B. Prepare a journal entry to record the amortization of the franchise fee at the end of year 1.