Carls Restaurants acquired Welcome Diners. The financial records of Welcome Diners included the following: Book Value of

Question:

Carl’s Restaurants acquired Welcome Diners. The financial records of Welcome Diners
included the following:
Book Value of Assets ...................................................................................... $2.4 million
Market Value of Assets ................................................................................... 2.8 million
Market Value of Liabilities............................................................................... 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 .
2. How should Carl’s Restaurants account for this after acquiring Welcome Diners? Explain in detail.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...