Goodwill (Learning Objective 6) 15–20 min.

Carl’s Restaurants acquired Welcome Diners. The financial records of Welcome Diners included:

Book Value of Assets ......................................................................................

Market Value of Assets ...................................................................................

Market Value of Liabilities ...............................................................................

$2.4 million 2.8 million 1.3 million Requirements 1. Make the journal entry to record Carl’s Restaurants’ purchase of Welcome Diners for $2.6 million cash, including any goodwill.

2. How should Carl’s Restaurants account for this goodwill after acquiring Welcome Diners? Explain in detail.

AppendixLO1