Assume that fast-food restaurants generally provide an ROI of 12%, but that such a restaurant near a college campus has an ROI of 15% because its relatively large volume of business generates an above-average turnover (sales/assets). The replacement value of the restaurants plant and equipment is $600,000. If you were to invest that amount in a restaurant elsewhere in town, you could expect a 12% ROI.

a-2. What is the maximum price you would be willing to pay for the business?

b. If you purchased the restaurant near the campus for $750,000 and the fair value of the assets you acquired was $600,000, identify the account along with its balance, that is used to record the additional amount paid over the fair value of the assets.