Accounting for intangible assets
Xie Company purchased Atlantic Transportation Co. for $1.200,000. The fair market values of the assets purchased were as follows. No liabilities were assumed.
Equipment | $400,000 |
Land | 100,000 |
Building | 400,000 |
Franchise (10-year life) | 20,000 |
Required
a. Calculate the amount of goodwill purchased.
b. Prepare the journal entry to record the amortization of the franchise fee at the end of year 1.
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