Assume Cronin Company paid $$19$ million to acquire Bella Industries. Assume further that Bella had the following summarized data at the time of the Cronin acquisition $($amounts in millions$)$:

$($Click the icon to view the data$)$

Bella's current assets had a current market value of $$15$ million, long$-$term assets had a current market value of only $$25$ million, and liabilities had a market value of $$27$ million.

Read the requirements.

Requirement $1.$ Compute the cost of goodwill purchased by Cronin Company. $($Enter amounts in millions$)$

Cost of goodwill purchased:

Purchase price paid for Bella Industries

Sum of the market values of Bella Industries' assets

Less: Market values of Bella Industries' liabilities

Market value of Bella Industries' net assets

Cost of goodwill

Data table

Requirements

Compute the cost of goodwill purchased by Cronin Company

Journalize Cronin's purchase of Bella Industries.

Explain how Cronin will account for goodwill.