Pilgrim has acquired several other companies. Assume that Pilgrim purchased Kate for $9,000,000 cash. The book value of Kate's assets is $16,000,000 (market value, $20,000,000), and it has liabilities of $15,000,000 (market value, $15,000,000). Requirements 1. Compute the cost of goodwill purchased by Pilgrim. 2. Record the purchase of Kate by Pilgrim. Requirement 1. Compute the cost of goodwill purchased by Pilgrim. Purchase price to acquire Kate Market value of Kate's assets Less: Market value of Kate's liabilities Less: Market value of Kate's net assets Goodwill