Carl s Restaurants acquired Welcome Diners The financial records of Welcome
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 goodwill.
2. How should Carl’s Restaurants account for this goodwill after acquiring Welcome Diners? Explain in detail.

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