Calculate the amount of goodwill from the following information-
BC Ltd. took over Assets of ₹6,00,000 and Liabilities of ₹40,000 of XYZ Ltd. at an agreed value of ₹6,30,000. ABC Ltd. issued 10% Debentures of ₹100 each at a discount of 10% to XYZ Ltd. in full satisfaction of the purchase price.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹70,000.
Net assets = ₹6,00,000
Liabilities = ₹40,000
Purchase consideration = ₹6,30,000
Net assets = Liabilities + purchase consideration
6,00,000 = 40,000 + 6,30,000
(As the amount is not equal. assets are lower so the difference is goodwill)
Goodwill = ₹70,000