When one media company buys another, goodwill is often the most costly asset. Decca Publishing paid \($240,000\) to acquire Tri Town Daily, a weekly advertising paper. At the time of the acquisition, Tri Town Daily’s balance sheet reported total assets of \($160,000\) and liabilities of \($80,000\). The fair market value of Tri Town Daily’s assets was $120,000.
Requirements
1. How much goodwill did Decca Publishing purchase as part of the acquisition of Tri Town Daily?
2. Journalize Decca Publishing’s acquisition of Tri Town Daily.