Blue Prints Ltd. purchased a building worth ₹1,50,000, Machinery worth ₹1,40,000, and Furniture worth ₹10,000 from XYZ Co. and took over its liabilities of ₹20,000 for a purchase consideration of ₹3,15,000. Calculate the Goodwill/Capital Reserve to be recorded by Blue Prints Ltd.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹35,000 Goodwill
When a business is bought, the purchase consideration is compared with the net assets taken over. If the consideration is more, the excess is goodwill; if it is less, the shortfall is capital reserve.
Assets taken over = ₹1,50,000 + ₹1,40,000 + ₹10,000 = ₹3,00,000
Less: Liabilities taken over = ₹20,000
Net assets = ₹2,80,000
Purchase consideration = ₹3,15,000
Goodwill = ₹3,15,000 − ₹2,80,000 = ₹35,000
Leaving out the liabilities gives ₹15,000, and adding them instead of deducting gives ₹55,000.
NCERT (2026-27 edition):
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