Princess has acquired several other companies. Assume that Princess purchased Kettle for $$11,000,000$ cash. The book value of Kettle's assets is $$12,000,000($market value, $$16,000,000),$ and it has liabilities of $$14,000,000($market value, $$14,000,000).$

Requirements

Compute the cost of goodwill purchased by Princess.

Record the purchase of Kettle by Princess.

Requirement $1.$ Compute the cost of goodwill purchased by Princess.

Purchase price to acquire Kettle

Market value of Kettle's assets

Less: Market value of Kettle's liabilities

Less: Market value of Kettle's net assets

Goodwill