Question : Net Assets + goodwill is
Option 1: Purchases consideration
Option 2: Total assets
Option 3: Capital reserve
Option 4: Current assets
Correct Answer: Purchases consideration
Solution : Answer = Purchases consideration
The sum of net assets and goodwill is termed as the purchase consideration in an acquisition. It represents the total value paid by the acquiring company to obtain the assets and goodwill of the acquired company. This amount reflects the consideration transferred in exchange for acquiring control over the acquired entity.
Net assets + Goodwill = Purchase consideration. Hence, the correct option is 2.
Question :
When Net Assets are more than Purchase Consideration. the excess of Net Assets over Purchase Consideration is credited to-----------------
Option 1: Goodwill account
Option 2: Capital reserve account
Option 3: Profit and loss account
Option 4: Vendor account
When Purchase Consideration is more than Net Assets. the excess of Purchase Consideration over Net Assets is debited to --------------------
Question : Working capital is the difference between
Option 1: Total debt and long term debt
Option 2: Liquid assets and current liabilities
Option 3: Current assets and current liabilities
Option 4: Total assets and current liabilities
Question : The value of goodwill can be defined as excess of amount paid for business over and above its ________
Option 1: Total Assets
Option 2: Current Assets
Option 3: Net Worth
Option 4: Working Capital
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