Elizabeth Pie Company has been in business for 30 years and has developed a large group of loyal restaurant customers. Bonanza Foods made an offer to buy Elizabeth Pie Company for $5,000,000. The book value of Elizabeth Pie’s recorded assets and liabilities on the date of the offer is $4,300,000 with a market value of $4,500,000. Elizabeth Pie also
(1) Holds a patent for a pie crust fluting machine that the company invented (the patent with a market value of $200,000 was never recorded by Elizabeth Pie because it was developed internally)
(2) Estimates goodwill from loyal customers to be $310,000 (also never recorded by the company). Should Elizabeth Pie Company management accept Bonanza Foods’ offer of $5,000,000? If so, compute the amount of goodwill that Bonanza Foods should record on the date of the purchase.