CMA Intermediate · Direct and Indirect Taxation · Capital Gains
For a slump sale under the Income-tax Act, 2025, an undertaking has these book values: building (a depreciable block) with WDV Rs 30 lakh under the Act (book value Rs 45 lakh), stock Rs 20 lakh, self-generated goodwill book value Rs 5 lakh, and liabilities of Rs 18 lakh. Revaluation is to be ignored. What is the net worth?
Net worth is Rs 32 lakh. The depreciable block is taken at its tax written down value of Rs 30 lakh, stock at Rs 20 lakh, and self-generated goodwill at nil, giving assets of Rs 50 lakh, which are reduced by liabilities of Rs 18 lakh.
- ARs 32 lakhCorrect
- BRs 37 lakh
- CRs 50 lakh
- DRs 52 lakh
Explanation
Depreciable assets are taken at block WDV: 30. Stock at book value: 20. Self-generated goodwill is nil. Total assets = 50; less liabilities 18 = Rs 32 lakh. Using book value of the building gives Rs 47 lakh, and including goodwill adds 5 more, both wrong.
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