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Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000?
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Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs...
Calculation of Goodwill in a Business Acquisition
When a company acquires another company, it takes over its assets and liabilities. The purchase consideration is the price that the acquiring company pays for the acquired company. The difference between the purchase consideration and the net assets acquired is known as goodwill.
The formula for calculating goodwill is:
Goodwill = Purchase Consideration - Net Assets Acquired
In this case, the net assets acquired are:
Net Assets = Assets - Liabilities
Net Assets = Rs. 10,00,000 - Rs. 3,00,000
Net Assets = Rs. 7,00,000
Therefore, the goodwill can be calculated as:
Goodwill = Rs. 12,00,000 - Rs. 7,00,000
Goodwill = Rs. 5,00,000
Hence, the amount that will be debited to goodwill account is Rs. 5,00,000.
Conclusion
Goodwill is an intangible asset that represents the value of a company's reputation, brand, customer base, and other non-physical assets. It is calculated as the difference between the purchase consideration and the net assets acquired. In this case, the goodwill amount is Rs. 5,00,000.
When a company acquires another company, it takes over its assets and liabilities. The purchase consideration is the price that the acquiring company pays for the acquired company. The difference between the purchase consideration and the net assets acquired is known as goodwill.
The formula for calculating goodwill is:
Goodwill = Purchase Consideration - Net Assets Acquired
In this case, the net assets acquired are:
Net Assets = Assets - Liabilities
Net Assets = Rs. 10,00,000 - Rs. 3,00,000
Net Assets = Rs. 7,00,000
Therefore, the goodwill can be calculated as:
Goodwill = Rs. 12,00,000 - Rs. 7,00,000
Goodwill = Rs. 5,00,000
Hence, the amount that will be debited to goodwill account is Rs. 5,00,000.
Conclusion
Goodwill is an intangible asset that represents the value of a company's reputation, brand, customer base, and other non-physical assets. It is calculated as the difference between the purchase consideration and the net assets acquired. In this case, the goodwill amount is Rs. 5,00,000.
Community Answer
Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs...
The amount to be debited in the goodwill account will be rupees 5,00,000.
- - The assets of the company are 10,00,000 and the liabilities are 3,00,000. The purchase consideration will also be regarded as a part of the liability and so the total liability amount will be 15,00,000.
- - As we can note that the debit balance is less than the credit side hence the balance between the two sides will be debited.
- - The balance that we will get is 15,00,000-10,00,000 which is 5,00,000 and this will be debited to the goodwill account.
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Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000?
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Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000?.
Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000?.
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Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000?, a detailed solution for Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000? has been provided alongside types of Ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000 for purchase consideration worth Rs. 12,00,000 how much amount will be debited to goodwill account a. Rs. 10,00,000 b. Rs. 5,00,000 c. Rs. 3,00,000 d. Rs. 12,00,000? theory, EduRev gives you an
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