Mia-Tora Company purchased a fast-food restaurant for $1,400,000. The fair market value 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.

Purchase Price
Less: FMV of Assets Acquired
Equipment
Land
Building
Franchise
Goodwill Purchased

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


Account Titles Debit Credit

Amortization Expense1
Franchise