Data Ltd. purchased assets of the book value ₹4,00,000 and took over the liability of ₹50,000 from Sona Ltd. It was agreed that purchase consideration will be settled by cheque of ₹1,00,000 and by issue of ₹2,00,000, 10% debentures at premium of 25%. The Amount of goodwill or capital reserve will be -

There will not be any Goodwill or Capital Reserve

The correct answer is Option (4) → There will not be any Goodwill or Capital Reserve.

Assets = ₹4,00,000
Liability = ₹50,000

Purchase consideration = Assets - Liabilities
                                  = 4,00,000 - 50,000
                                  = 3,50,000

Purchase consideration will be settled by cheque of ₹1,00,000 and by issue of ₹2,00,000, 10% debentures at premium of 25%.

After giving amount by cheque remaining amount is 3,50,000 - 1,00,000
                                                                         = 2,50,000

No of debenture = 2,00,000/100
                        = 2,000 debentures

Premium = 2,000 x 25
              = 50,000

Total amount paid by issue of debentures = 2,00,000 + 50,000
                                                            = 2,50,000

So, there is no goodwill or capital reserve.