The Log Cabin Cafe acquired Hungry Boy Diners. The financial records of Hungry Boy Diners included: Book

Question:

The Log Cabin Cafe acquired Hungry Boy Diners. The financial records of Hungry Boy Diners included:

Book Value of Assets ..................................... $440,000

Market Value of Assets .................................... 480,000

Market Value of Liabilities ................................. 230,000

Requirements

1. Make the journal entry to record The Log Cabin Cafe's purchase of Hungry Boy

Diners for $325,000 cash, including any goodwill.

2. How should The Log Cabin Cafe account for this goodwill after acquiring Hungry Boy 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...