Mia-Tora Company purchased a fast-food restaurant for \(\$ 1,400,000\). The fair market values of the assets purchased were as follows. No liabilities were assumed.

Required

a. Calculate the amount of goodwill purchased.

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

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Equipment $320,000 Land 200,000 Building 650,000 Franchise (5-year life) 100,000