Kirson Holdings Ltd. purchased the net assets of Baker Ltd. in January 2020 for $5,658,000. Kirson had appraisals conducted that indicated that the fair values of the assets purchased and liabilities assumed were as follows:

The patent acquired has 18 years remaining in its useful life. Kirson’s management determined that it would contribute to the generation of revenues for five years, after which it would be obsolete.

Required

a. Determine the amount of goodwill Kirson acquired in the purchase.

b. Prepare the journal entry to record the amortization of the patent for 2020.

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$540,000 589,000 980,000 Inventory Accounts receivable Patents Accounts payable Bank loan payable $1,185,000 658,000 2,360,000 Equipment