In which account will the difference between the assets and liabilities taken over and the payment made be transferred, if ABC 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?

Goodwill

The correct answer is option 2- goodwill.

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
6,00,000 = 6,70,000
(As the amount is not equal. Assets are lower so the difference is goodwill)
Goodwill = ₹70,000