Dylan Company acquits 100% of the stock of Lennon Co. Dylan pays $500,000 in cash.

When Dylan purchases Lennon, the fair value of Lennons assets and liabilities are as follows:

• Accounts receivable $ 125,000
• Inventory $ 275,000
• Land and buildings $ 250,000
• Other fixed assets $ 100,000
• Trademarks and customer lists $ 100,000
• Accounts payable and other current liabilities ($120,000)
• Long-term debt ($400,000)

Fair value of net assets $ 330,000

1. Determine the amount of goodwill Dylan pays. Show the calculation.
2. Explain whether goodwill is amortized or subject to impairment treatment and the reason for that accounting treatment.