Owens Bhd negotiated to acquire most of the issued share capital of Mike Bhd. It was agreed that the business combination would be effected through a share exchange. Owens would issue 5 million of its equity shares and acquire 8 million of Mike's issued shares. This would give Owens 80% control over Mike.

Owes calculated goodwill of Mike, using discounted cash flow and arrived at a value of RM1 million. The fair value of Owens' equity share on the date of business combination was estimated at RM4.

The fair value of identifiable net assets (assets and liabilities) of Mike on that date was RM17 million. Owens wanted Mike to recognise the goodwill of RM1 million in its books.

At the same time, Owens wanted to recognise goodwill for its own business and estimated it to be RM2.5 million.

Required:

Advise Owens on calculating and accounting for Goodwill in Mike and in Owens.