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Question : X Ltd. took over assets of Rs.5,00,000 and liabilities of Rs.1,00,000 of   another company at an agreed price of Rs.3,80,000. The purchase consideration was discharged by issuing debentures of Rs. 100 each at a discount of 10%. It was agreed that any fraction of the debenture be paid in cash.

Question:- Balance of Rs.20,000 will be 

Option 1: Debited to goodwill Account
 

Option 2: Debited to capital reserve account 

Option 3: Credited to securities account 
 

Option 4: Credited to Capital Reserve account 


Team Careers360 15th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: Credited to Capital Reserve account


Solution : Answer = Credited to Capital Reserve Account

Net  Assets = 5,00,000- 1,00,000= Rs 4,00,000
Purchase consideration = 3,80,000
If purchase consideration is less than Net Assets, then the balance is transferred to the Capital reserve.
Hence, the correct option is 4.

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