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Direction: Choose the correct answer to the following questions from the given alternatives:
Excess value of net assets over purchase consideration at the time of purchase of business is credited to:
- a)General reserve,
- b)Capital reserve,
- c)Vendors’ account.
- d)Goodwill.
Correct answer is option 'B'. Can you explain this answer?
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Direction:Choose the correct answer to the following questions from th...
Explanation:
- Excess value of net assets: This refers to the situation where the total value of the net assets acquired in a business purchase exceeds the purchase consideration paid for those assets.
- Capital reserve: When there is excess value of net assets over purchase consideration, this amount is credited to capital reserve. Capital reserve is a type of reserve that is created out of capital profits and cannot be distributed as dividends to shareholders.
- General reserve: General reserve is created out of retained earnings or profits of the business and is used for various purposes like expansion, diversification, or meeting unexpected contingencies.
- Vendors' account: Vendors' account is used to record the amounts payable to the vendors from whom the assets were purchased.
- Goodwill: Goodwill represents the reputation, brand value, customer loyalty, etc. of a business that is not directly attributable to any specific asset and is recorded as an intangible asset on the balance sheet.
Therefore, in the given scenario, when there is an excess value of net assets over purchase consideration at the time of purchase of a business, it is credited to Capital reserve. This helps in maintaining transparency in the financial statements and ensures that the excess value is appropriately accounted for in the books of accounts.
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Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer?
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Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer?.
Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction:Choose the correct answer to the following questions from the given alternatives:Excess value of net assets over purchase consideration at the time of purchase of business is credited to:a)General reserve,b)Capital reserve,c)Vendors’ account.d)Goodwill.Correct answer is option 'B'. Can you explain this answer?.
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