BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Property, Plant and Equipments
|
|
|
Capital Reserve
|
|
|
Cash Account
|
|
|
Goodwill
|
Detailed explanation-1: -Any excess of the amount of purchase consideration over the value of net assets of the transferor company acquired by the transferee company should be recognised as goodwill in the financial statements of transferee company.
Detailed explanation-2: -Any excess of the amount of the consideration over the value of the net assets of the transferor company acquired by the transferee company should be recognised in the transferee company’s financial statements as goodwill arising on amalgamation.
Detailed explanation-3: -Answers. Net asset method-> When assets and liabilities taken over are given then purchase consideration is the difference of assets and liabilities at agreed values. If it is not decided it is equal to excess of purchase consideration by net payment method over net assets.
Detailed explanation-4: -Excess value of net assets over purchase consideration at the time of purchase of business is credited to capital reserve.
Detailed explanation-5: -Goodwill is recorded when a company acquires (purchases) another company and the purchase price is greater than 1) the fair value of the identifiable tangible and intangible assets acquired, minus 2) the liabilities that were assumed. Goodwill is reported on the balance sheet as a long-term or noncurrent asset.