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 -
Answer & explanation
Correct answer: option 4
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.