Potters has acquired several other companies. Assume that Potters purchased Kittery for $ 6,000,000 cash. The book value of Kittery’s assets is $ 12,000,000 (market value, $ 15,000,000), and it has liabilities of $ 11,000,000 (market value, $ 11,000,000).
1. Compute the cost of the goodwill purchased by Potters.
2. Record the purchase of Kittery by Potters.