Question :
When Purchase Consideration is more than Net Assets. the excess of Purchase Consideration over Net Assets is debited to --------------------
Option 1: Goodwill account
Option 2: Capital reserve account
Option 3: Profit and loss account
Option 4: Vendor account
Correct Answer: Goodwill account
Solution : Answer = Goodwill account
When the purchase consideration exceeds the net assets acquired, the excess amount is typically debited to the Goodwill account. This represents the premium paid for intangible assets such as brand value, customer relationships, or favourable market positioning. It reflects the value of the business beyond its tangible assets. Hence, the correct option is 1.
When Net Assets are more than Purchase Consideration. the excess of Net Assets over Purchase Consideration is credited to-----------------
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An increase in the value of assets at the time of retirement of a partner is
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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:
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