Question

The difference between the purchase consideration and the net assets of the vendor company, if any, is either debited to the Goodwill Account or credited to the Capital Reserve Account​

Answer 1

Answer:

..... ANSWER

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