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When shares are issued to promoters which account should be debited:
- a)Share Capital A/c
- b)Assets A/c
- c)Promoters A/c
- d)Goodwill A/c
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
When shares are issued to promoters which account should be debited:a)...
Goodwill A/C DR
to equity share capital A/C
Goodwill account is debited on the assumption that promoter’s function has resulted in forming the company into profitable unit.
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When shares are issued to promoters which account should be debited:a)...
Debiting Goodwill A/c when shares are issued to promoters:
When shares are issued to promoters, it means that they are being given a stake in the company. This stake can be seen as an intangible asset of the company, in the form of the reputation, expertise and network of the promoters. Hence, the company records this intangible asset by debiting the Goodwill A/c.
Goodwill A/c is an intangible asset account that records the value of the company's reputation, brand name, customer loyalty, etc. It is a non-physical asset that cannot be touched or seen, but it has a value that can be estimated. When shares are issued to promoters, the company is essentially acquiring their expertise, contacts and reputation, which adds value to the company. Hence, the Goodwill A/c is debited to record this intangible asset.
Some key points to note:
- When shares are issued to promoters, it means that the company is acquiring their expertise, contacts and reputation.
- This adds value to the company, which is recorded as an intangible asset.
- Goodwill A/c is an intangible asset account that records the value of the company's reputation, brand name, customer loyalty, etc.
- Hence, when shares are issued to promoters, the Goodwill A/c is debited to record this intangible asset.
In conclusion, when shares are issued to promoters, the Goodwill A/c is debited to record the intangible asset of the company.
When shares are issued to promoters, it means that they are being given a stake in the company. This stake can be seen as an intangible asset of the company, in the form of the reputation, expertise and network of the promoters. Hence, the company records this intangible asset by debiting the Goodwill A/c.
Goodwill A/c is an intangible asset account that records the value of the company's reputation, brand name, customer loyalty, etc. It is a non-physical asset that cannot be touched or seen, but it has a value that can be estimated. When shares are issued to promoters, the company is essentially acquiring their expertise, contacts and reputation, which adds value to the company. Hence, the Goodwill A/c is debited to record this intangible asset.
Some key points to note:
- When shares are issued to promoters, it means that the company is acquiring their expertise, contacts and reputation.
- This adds value to the company, which is recorded as an intangible asset.
- Goodwill A/c is an intangible asset account that records the value of the company's reputation, brand name, customer loyalty, etc.
- Hence, when shares are issued to promoters, the Goodwill A/c is debited to record this intangible asset.
In conclusion, when shares are issued to promoters, the Goodwill A/c is debited to record the intangible asset of the company.
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When shares are issued to promoters which account should be debited:a)Share Capital A/cb)Assets A/cc)Promoters A/cd)Goodwill A/cCorrect answer is option 'D'. Can you explain this answer?
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