(Learning Objective 5: Computing and accounting for goodwill) Assume Kaledan paid €18 million to purchase Southwest.com. Assume further that Southwest had the following summarized data at the time of the Kaledan acquisition (amounts in millions):

Southwest’s long-term assets had a current market value of only €17 million.

❙ Requirements 1. Compute the cost of goodwill purchased by Kaledan.

2. Journalize Kaledan’s purchase of Southwest.

3. Explain how Kaledan will account for goodwill in the future.