Rambo Ltd. took over Assets of 28,00,000 and Liabilities of ₹3,50,000 from Amber Ltd. and issued them 30,000, 12% debenture of 100 each at 10% discount. Determine the amount of Goodwill or capital reserve.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Goodwill ₹2,50,000.
Assets = 28,00,000
Liabilities = ₹3,50,000
30,000, 12% debenture of 100 each at 10% discount.
Issue price = 100- 10
= 90
Purchase consideration = 30,000 x 90
= 27,00,000
Assets = Liability + purchase consideration
28,00,000 = 3,50,000 + 27,00,000
28,00,000 = 30,50,000
As liability side is more than assets side so balancing figure on the assets side is goodwill.
Goodwill = 30,50,000 - 28,00,000
= 2,50,000