Excess value of net assets over purchase consideration at the time of…

The correct answer is Option (2) → Capital reserve account

When the net assets taken over are worth more than the purchase consideration, the business has been bought for less than its worth. The excess is a capital profit, so it is credited to Capital Reserve Account; it is not a revenue profit for the Statement of Profit and Loss, and nothing more is due to the vendor.

Note: This is NCERT’s own (2026-27) Test your Understanding question (Test your Understanding – II, question 6), but the answer key at the end of the book’s chapter prints “6 (c)”, that is, Vendors’ account. That is a misprint in the book’s key: the book’s own text, shown below, credits the difference to Capital Reserve, which is also the answer given by NTA.