CMA Intermediate · Financial Accounting · Amalgamation of Partnership Firms
Firm X is taken over by a new firm. The agreed values of the assets taken over total ₹8,00,000 and the liabilities taken over total ₹2,00,000. The partners agree that the purchase consideration for Firm X is ₹7,50,000. What amount of goodwill will the new firm record in its opening entry for Firm X?
Goodwill is ₹1,50,000. The new firm takes over net assets of ₹6,00,000 (assets ₹8,00,000 less liabilities ₹2,00,000) and agrees to pay ₹7,50,000. The excess of consideration over net assets taken over is recorded as goodwill.
- A₹1,50,000Correct
- B₹2,00,000
- C₹6,00,000
- D₹7,50,000
Explanation
Net assets taken over = 8,00,000 − 2,00,000 = 6,00,000. Purchase consideration 7,50,000 exceeds net assets by 1,50,000, which is goodwill. Choosing 2,00,000 mistakenly uses the liabilities figure.
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