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On July 1, 2004 Jax, Inc. purchased a subsidiary at a cost of $8,200,000. The subsidiary's balance sheet

On July 1, 2004 Jax, Inc. purchased a subsidiary at a cost of $8,200,000. The subsidiary's balance sheet reported assets and liabilities totalling $12,900,000 and $8,200,000, respectively. The fair value of the assets exceeds the book value by $300,000. The book value of the liabilities equalled the fair value. Te subsidiary is expected to produce profits for 40 years.

Determine how much goodwill Jax will record at acquisition. What test must be performed on goodwill at least manually?

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