Painted Desert has acquired several companies. Assume that Painted Desert purchased Oak Tree Unlimited for $$14,000,000$ cash.

The book value of Oak Tree Unlimited's assets is $$14,000,000($fair value, $$15,000,000),$ and it has liabilities of $$13,000,000($fair

value, $$13,000,000).$

Requirements

Compute the cost of goodwill purchased by Painted Desert.

Record the purchase of Oak Tree Unlimited by Painted Desert.

Requirement $1.$ Compute the cost of goodwill purchased by Painted Desert.

Purchase price to acquire Oak Tree Unlimited

Fair value of Oak Tree Unlimited's assets

Less: Fair value of Oak Tree Unlimited's liabilities

Less: Fair value of Oak Tree Unlimited's net assets

Goodwill

Requirement $2.$ Record the purchase of Oak Tree Unlimited by Painted Desert. $($Record debits first, then credits. Select the

explanation on the last line of the journal entry table.$)$