A ltd issued debentures of Rs 4,40,000 in consideration of assets of Rs 5,00,000 and liabilities of Rs1,00,000. The amount of Rs 40,000 will be debited to which account?

Capital Reserve Loss on issue of Debentures Goodwill None of the above

Goodwill

In case of the whole business being taken over if the amount of debentures issued is more than the amount of the net assets taken over, the difference (excess) will be treated as value of goodwill and the same shall also be debited while passing the journal entry for the purchase of vender’s business . But if it is the other way round, i.e., the value of debentures is less than the value of the net assets taken over the difference will be credited to capital Reserve accounts.