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Required: 1. Make a general journal entry to record The Sunflower Ltd.s. purchase of the other company for $2.5 million cash 2. How should The

Required:

1. Make a general journal entry to record The Sunflower Ltd.s. purchase of the other company for $2.5 million cash

2. How should The Sunflower Ltd. account for goodwill at year end and in the future? Explain in detail.

The Sunflower Ltd. operates franchised coffee shops. Assume that The Sunflower Ltd. purchased another company, which carried these figures:

Book value of assets $3.6 million

Market value of assets $ 4.4 million

Liabilities $2.2 million

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