We should not allow the client to recognize a $$1$ million $$Water$$ asset on the balance sheet. Instead, consistent with ASC $805-30-25,$ the $$1$ million premium should be recorded as goodwill, representing the excess of the purchase price over the fair value of the net identifiable assets.

The water access contributes to the company's future earnings potential and competitive advantage but does not meet the requirements for recognition as a separate intangible asset. It is therefore appropriate and compliant to account for the premium as goodwill.

Please let me know if you would like me to communicate this position to the client or assist in drafting the response.