Question

Question No. 7
• If bile equity share of 1,25,000 of Rs. 10 each and 9% debentures 5000 of Rs. 100 each then find out purchase consideration​

Answer 1

Explanation:

Purchase consideration can be paid off either by cash or issue of shares.

If the purchase consideration is more than the net assets worth, the difference amount will be considered as payment of goodwill.

If the purchase consideration is lower than the net assets worth, the difference amount will be considered as capital reserves.

Here:

Purchase Consideration Rs.80000

Net Assets worth Rs.60000

Balance to be paid against goodwill Rs.20000