Question :
Exe Ltd. took over assets of Rs. 7,00,000 and liabilities of Rs. 60,000 of Wye Ltd. for the purchase consideration of Rs. 6,60,000. Exe Ltd. paid the purchase consideration by issuing 9% Debentures of Rs. 100 each at 10% premium.
Goodwill/capital reserve will be debited/credited by _________.
Option 1: Debited goodwill account by Rs 20,000
Option 2: Credited capital reserve by Rs 20,000
Option 3: Debited profit and loss account by Rs 20,000
Option 4: Debited goodwill account by Rs 40,000
Correct Answer: Debited goodwill account by Rs 20,000
Solution : Answer = Debited goodwill account by Rs 20,000
Goodwill A/C Dr 20,000
Assets A/C Dr 7,00,000
To Liabilities - 60,000
To Vendor Co - 6,60,000
Hence, the correct option is 1.