Question : If vendors are issued fully paid shares of Rs.5,00,000 in consideration of net assets Rs.3,00,000. Then the balance of Rs.2,00,000 will be:
Option 1: Debited of Statement of Profit and Loss
Option 2: Debited to Goodwill Account
Option 3: Credited to Capital Reserve Account
Option 4: Credited to Securities Premium Account

Question

Question : If vendors are issued fully paid shares of Rs.5,00,000 in consideration of net assets Rs.3,00,000. Then the balance of Rs.2,00,000 will be:

Option 1: Debited of Statement of Profit and Loss

Option 2: Debited to Goodwill Account

Option 3: Credited to Capital Reserve Account

Option 4: Credited to Securities Premium Account

Team Careers360 · Accepted Answer

Correct Answer: Debited to Goodwill Account

Solution : Goodwill = Purchase Consideration - Net Assets = Rs.5,00,000 - Rs.3,00,000 = Rs.2,00,000. Goodwill Account will be debited with Rs.2,00,000. Hence, the correct option is 2.

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