ABC Ltd took over assets of ₹14,00,000 and liabilities of ₹4,00,000 of TS Ltd. for the purchase consideration of ₹12,00,000. How will the Goodwill account be treated?

Debited by ₹2,00,000

The correct answer is option 2- Debited by ₹2,00,000.

Goodwill = Purchase consideration - Net Assets 
             = Purchase consideration  - (Assets-Liabilities)
              = 12,00,000- (14,00,000-4,00,000)
              = 12,00,000 - 10,00,000
              = 2,00,000

Goodwill is an asset so goodwill is debited with ₹2,00,000.