If the value of purchase consideration payable to the vendor is less than the value of the net assets taken over by the company, the difference will be credited to:
If the value of purchase consideration payable to the vendor is less than the value of the net assets taken over by the company, the difference will be credited to:
Solution
✅ Correct Option: 2
Net assets taken over minus purchase consideration gives a gain of a capital nature. Since assets are debited and consideration credited, the balancing credit is transferred to Capital Reserve. The reverse case (consideration higher) would be debited to Goodwill.
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