Question

    A Ltd purchase the running business of K Ltd consists of

    total asset of Rs. 10,00,000 liabilities of Rs. 2,00,000. A Ltd paid Rs. 2,00,000 immediately in cash and balance by issuing 7,000 shares of Rs. 100 each at a premium of Rs. 20 per share. The goodwill A/c will be debited by Rs. _______.
    A Rs. 2,30,000 Correct Answer Incorrect Answer
    B Rs. 2,50,000 Correct Answer Incorrect Answer
    C Rs. 2,60,000 Correct Answer Incorrect Answer
    D Rs. 2,40,000 Correct Answer Incorrect Answer
    E Rs. 100,000 Correct Answer Incorrect Answer

    Solution

    Net Assets of A ltd: 10,00,000 – 2,00,000 = 8,00,000 Total Consideration paid:  In Cash200,000 In Shares 7000 * 120 =840,000 10,40,000 Goodwill = 1040,000 – 800000 = 240,000

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