Please document attached and tell me, where is the $1,200,000 coming from? Fair value increments = Exception assets ? Book value = 1,200,000

Johnson Corporation purchased all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith's net assets (assets minus liabilities) was $7,800,000. The fair values of all of Smith's assets and liabilities were equal to their book values with the following exceptions: Required: Calculate the amount paid for goodwill. Solution: Acquisition differential = Amount paid - Book value = 11,000,000 - 7,800,000 = 3,200,000 Fair value increments = Exception assets - Book value = 1,200,000 Goodwill = Acquisition differential - Fair value increments = $3,200,000 $1,200,000 = $2,000,000