Given the following data, Calculate the Total of

Solution

1.      Total Equity and Liability = Total equity + total liabilities Total Equity = Share capital + reserves = ₹5,00,000 + ₹2,00,000 = ₹7,00,000
Total Liabilities = ₹3,00,000 (loans) + ₹1,00,000 (current liabilities) = ₹4,00,000
Total Equity and Liability = ₹7,00,000 + ₹4,00,000 = ₹11,00,000   2.      Goodwill As per accounting equation: Total Equity and liabilities = Total Assets If the total of liabilities and equity exceeds the identifiable assets, the difference is recognized as Goodwill (an intangible asset).   Total Assets as given in the data = fixed assets + current assets = 6,00,000 + 3,00,000 = 9,00,000     As such, Goodwill = Total Equity and liabilities - identified Assets =11,00,000 – 9,00,000 =   ₹2,00,000