by debiting it to Profit & Loss A/c
by opening a goodwill account with the loss
by debiting it to goodwill account when some price for goodwill is paid at the time of purchasing the business
by debiting it to suspense A/c
Answer is Right!
Answer is Wrong!
The correct answer is: A. by debiting it to Profit & Loss A/c
A loss prior to incorporation cannot be treated by debiting it to Profit & Loss A/c because the company does not exist at the time of the loss. The loss should be carried forward to the first year of incorporation and adjusted against the profits of that year.
Option B is incorrect because opening a goodwill account with the loss would not be accurate, as the loss is not due to goodwill.
Option C is incorrect because goodwill is an asset, and the loss is not an asset.
Option D is incorrect because suspense account is used for temporary adjustments, and the loss is not a temporary adjustment.