6. Topic: Goodwill P Company acquires all of S Company in an acquisition accounted for as an asset acquisition. P issued common stock with a fair value of $8,000,000 for Ss net assets. The fair values of Ss assets and liabilities approximate book value, except S has customer lists valued at $3,000,000 that are not reported on its balance sheet, and its plant assets are overvalued by $5,000,000.

P Company S Company

Assets $30,000,000 $10,000,000

Liabilities $16,000,000 $ 6,000,000 Common stock, $1 par 1,000,000 100,000 Additional paid-in capital 9,000,000 2,900,000 Retained earnings 4,000,000 1,000,000 $30,000,000 $10,000,000

How much goodwill is recognized for this acquisition? a. $ 2,000,000 b. $ 3,000,000 c. $ 6,000,000 d. $11,000,000

**Please provide computations and explanation. Thank you!!