(L.OBJ. 5) Accounting for goodwill [10 min]
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.
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