Fresh Cut Corporation purchased all the outstanding common stock of Premium Meats for $11,000,000 in cash. The book value of Premium Meats' net assets (assets minus liabilities) was $7,800,000. The book values and fair values of Premium Meats' assets and liabilities were:
..........................................Book Value................. Fair Value
Receivables ............................$1,300,000............... $ 1,100,000
Property, plant, and equipment ......8,000,000..................9,400,000
Intangible assets ..........................200,000.................. 1,200,000
Liabilities .............................(1,700,000)................. (1,700,000)
Net assets .............................$7,800,000................ $10,000,000
Required:
1. Calculate the amount Fresh Cut paid for goodwill.
2. Record Fresh Cut's acquisition of Premium Meats.