Problem 8-34A Cafe Ole’ Company acquired a fast-food restaurant for $1,500,000. The fair market

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.