Required:

Calculate the amount paid for goodwill.

E $10-7$

Goodwill

L$01$

Johnson Corporation purchased all of the outstanding ordinary shares 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:

$\backslash$table$[[,$Book Value,Fair Value$],[$Receivables$,$$$1,300,000,$$$1,100,000$