Prince Corporation acquires Squire Service Corporation for one million shares of Prince stock, valued at $35 per share. Squire is merged into Prince, although it continues to do business under the Squire Service name. Professional fees connected with the acquisition are $1,200,000 and costs of registering and issuing the new shares are $600,000, both paid in cash. Squire performs vehicle maintenance services for owners of auto, truck and bus fleets. Squire's balance sheet at acquisition is as follows:

In reviewing Squire's assets and liabilities, you determine the following:
1. On a discounted present value basis, the accounts receivable have a fair value of $2,600,000, and the long-term liabilities have a fair value of $8,000,000.
2. The current replacement cost of the parts inventory is $6,000,000.
3. The current replacement cost of the equipment is $19,500,000.
4. Squire occupies its service facilities under an operating lease with ten years remaining. The rent is below current market levels, giving the lease an estimated fair value of $1,250,000.
5. Squire has long-term service contracts with several large fleet owners. These contracts have been profitable; the present value of expected profits over the remaining term of the contracts is estimated at $2,000,000.
6. Squire has a skilled and experienced work force. You estimate that the cost to hire and train replacements would be $750,000.
7. Squire's trade name is well-known among fleet owners and is estimated to have a fair value of $200,000.
Required
a. Calculate the amount of goodwill that Prince records for the acquisition.
b. Prepare Prince's journal entry or entries to record the merger with Squire.

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Cash. 300,000 Accounts receivable Parts inventory 2,700,000 Long-term liabilities ....8,600,000 5,200,000 Stockholders equity.14,100,000 . . Total assets .$25,800,000 Total liabilities and equity...$25,800,000