Mervax Ltd acquired all assets and liabilities of Honsoon Ltd on 30 June 2020. The carrying amount and fair value of assets and liabilities taken over are as follows:

	Carrying amount ($)	Fair value ($)
Assets
Cash	15,000	15,000
Accounts Receivables (Net)	900,000	950,000
Inventory	1,000,000	1,200,000
Property, Plant and Equipment (Net)	4,000,000	6,000,000
Liabilities
Accounts payable	200,000	200,000
Provision for employee benefits	100,000	100,000

In addition, due diligence identified the existence of a brand names that was valued by an expert at $120,000. The due diligence process also uncovered contingent liabilities (Guarantee Payable) that were measured at $40,000.

The consideration paid was $7,500,000.

Required:

a) Calculate the amount of goodwill that would be recorded in the books of Mervax Ltd following the acquisition of Honsoon Ltd. Show all workings.

b) Record the journal entries for Mervax Ltd at acquisition date.