Media-related companies have little in the way of property, plant, and equipment. Instead, their main asset is goodwill. When one media company buys another, goodwill is often the most costly asset acquired. Assume that Media Watch paid $800,000 on March 22 to acquire The Thrifty Dime, a weekly advertising paper. At the time of the acquisition, The Thrifty Dime's balance sheet reported total assets of $1,300,000 and liabilities of $600,000. The fair market value of The Thrifty Dime's assets was $1,200,000.
1. How much goodwill did Media Watch purchase as part of the acquisition of The Thrifty Dime?
2. Journalize Media Watch's acquisition of The Thrifty Dime.