BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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business consideration
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goodwill
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redemption reserve
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purchase of business
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Detailed explanation-1: -In case of amalgamation, purchase consideration is the agreed amount which transferee. company (Purchasing company) pays to the transferor company (Vendor company) in. exchange of the ownership of the transferor company. It may be in form of cash, shares or any. other assets as agreed between both the companies.
Detailed explanation-2: -Goodwill arises when a company acquires another entire business. The amount of goodwill is the cost to purchase the business minus the fair market value of the tangible assets, the intangible assets that can be identified, and the liabilities obtained in the purchase.
Detailed explanation-3: -Goodwill is ‘an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised’ (IFRS 3 Appendix A).