Ticos Restaurants acquired Tin Bus Diners. The financial records of Tin Bus Diners included the following: Book

Question:

Tico’s Restaurants acquired Tin Bus Diners. The financial records of Tin Bus Diners included the following:

Book Value of Assets........................................................................ $2,300,000

Market Value of Assets..................................................................... 2,750,000

Liabilities........................................................................................... 2,250,000

Requirements

1. Make the journal entry to record Tico’s Restaurants’ purchase of Tin Bus Diners for $3,200,000 cash, including any goodwill.

2. How should Tico’s Restaurants account for this goodwill after acquiring Tin Bus 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...