Response to the following problem:
Media-related companies have little in the way of tangible plant assets. Instead, their main asset is goodwill. When one media company buys another, goodwill is often the most costly asset acquired. Media Watch paid $700,000 to acquire The Thrifty Nickel, a weekly advertising paper. At the time of the acquisition, The Thrifty Nickel's balance sheet reported total assets of $1,200,000 and liabilities of $600,000. The fair market value of The Thrifty Nickel's assets was $800,000.
1. How much goodwill did Media Watch purchase as part of the acquisition of The Thrifty Nickel?
2. Journalize Media Watch's acquisition of The Thrifty Nickel.