Question

Q. 2. X Ltd purchased the
running business of Y Ltd.
Consisting total assets of
Rs 10,00,000, liabilities of
2,00,000 X Ltd. paid Rs.
2,00,000 immediately
in cash and for balance issued
7,000 Shares of Rs. 100 each
at a premium of Rs. 20 per
share. The goodwill A/c will be
debited by Rs.​

Answer 1

by cheque and the balance by the issue of fully paid equity shares of Rs 100 each at a premium of

Answer 2

Goodwill A/c will be debited by Rs. 2,40,000.

Given: X Ltd. purchases the business of Y Ltd. by taking over assets and liabilities.

To Find: The Amount by which Goodwill A/c will be debited.

Solution:

Calculating the purchase consideration using net asset methods.

Total Assets of Y Ltd.                             Rs. 10,00,000

LESS: Total Liabilities of Y Ltd.              Rs.  2,00,000

Purchase Consideration to be paid       Rs.  8,00,000

Now, finding the mode of payment.

Total purchase consideration                       8,00,000

LESS: Amount paid in cash                            2,00,000

Balance to be paid in shares                         6,00,000

According to the question,

7,000 shares of Rs.100 at a premium of Rs.20                  8,40,000

        (7,000* 100+20)

Therefore,

Amount to be debited in Goodwill A/c                   2,40,000

       (8,40,000-6,00,000)

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