Goodwill (Learning Objective 6) 15–20 min.

Cottage Cafe acquired Don’s Diners. The financial records of Don’s Diners included:

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

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

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

$2.6 million 2.7 million 1.3 million Requirements 1. Make the journal entry to record Cottage Cafe’s purchase of Don’s Diners for $1.8 million cash, including any goodwill.

2. How should Cottage Cafe account for this goodwill after acquiring Don’s Diners?

Explain in detail.

AppendixLO1