Which of the following statement is correct?
A)the amount of goodwill or capital reserve is found out in the books of purchasing company only
B)the amount of goodwill or capital reserve is found out in the books of vendor company only.
C)goodwill = net assets - purchase price
D)the face value of shares of purchasing company will be taken in to account while calculating purchase consideration.

Question

Quizplus · Accepted Answer

The amount of goodwill or capital reserve arises in the books of the purchasing company as a result of business combinations, where the purchase consideration paid for an acquisition is compared with the net assets acquired. This does not occur in the vendor company's books.

Which of the Following Statement Is Correct