Question

Difference between book value of the liability and amount paid by the vender is transferred to the-

Select one:
A. None of these

O B.Goodwill account

C. Realisation Account

D.Statement of Profit & Loss

Answer 1

Answer:

none of these is answer i think

Answer 2

Answer:

The correct answer is option (B)Goodwill Account.

Explanation:

Goodwill Account-

• The premium paid during the acquisition of a business is known as goodwill.
• If a company is purchased for more than its book value, the acquiring company is paying for intangibles like brand recognition, skilled labour, customer loyalty, and so on.
• When purchasing or selling a business, goodwill represents the value of the company that exceeds the value of separately identifiable tangible business assets.
• Among the assets that can be classified as goodwill are:

1. Brand recognition and company name
2. Strong customer and supplier bases
3. Excellent customer service
4. Domain name and company website
5. Patents, trademarks, and copyright

Hence, we can conclude that the difference between book value of the liability and amount paid by the vender is transferred to the Goodwill Account.

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