BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Mr Song bought an existing business assets valued at:Shophouse RM89, 000, Motor Van RM31, 500, Inventory RM13, 700 and Liabilities RM21, 600. He paid RM140, 000 for the business. This means that ____
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he paid RM15, 800 for the goodwill
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he paid RM27, 400 for the goodwill
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he bore a loss of RM15, 800 for the business purchase
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he made a profit of RM27, 400 for the business purchase
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Explanation:
Detailed explanation-1: -Goodwill is calculated by taking the purchase price of a company and subtracting the difference between the fair market value of the assets and liabilities.
Detailed explanation-2: -Capital is the value of the investment in the business by the owner(s). It is that part of the business that belongs to the owner; hence it is often described as the owner’s interest.
Detailed explanation-3: -Book Value = (Total Common Shareholders Equity – Preferred Stock) /Number of Outstanding Common Shares.
There is 1 question to complete.