A company with total assets amounting to Rs. 15,00,000 (including Goodwill Rs. 1,50,000 discount on issue of shares Rs. 2,00,000 and accumulated loss Rs. 2,00,000) and the total liabilities amounting to Rs. 2,20,000 (including a contingent liability of Rs. 40,000) has been taken over by a new company for a purchase consideration of Rs. 11,50,000. the Goodwill a/c in the vendee company’s books will appear at:

The correct answer is: A. Rs. 90,000

The purchase consideration is Rs. 11,50,000. The total assets are Rs. 15,00,000, including goodwill of Rs. 1,50,000. The total liabilities are Rs. 2,20,000, including a contingent liability of Rs. 40,000. Therefore, the net assets are Rs. 12,80,000. The goodwill in the vendee company’s books will appear at Rs. 11,50,000 – Rs. 12,80,000 = Rs. 90,000.

Here is a brief explanation of each option:

• Option A: Rs. 90,000. This is the correct answer. The purchase consideration is Rs. 11,50,000. The total assets are Rs. 15,00,000, including goodwill of Rs. 1,50,000. The total liabilities are Rs. 2,20,000, including a contingent liability of Rs. 40,000. Therefore, the net assets are Rs. 12,80,000. The goodwill in the vendee company’s books will appear at Rs. 11,50,000 – Rs. 12,80,000 = Rs. 90,000.
• Option B: Rs. 1,50,000. This is the goodwill that existed in the vendor company’s books. However, the goodwill in the vendee company’s books will be different, as it will be based on the purchase consideration and the net assets of the vendor company.
• Option C: Rs. 4,20,000. This is the difference between the purchase consideration and the total assets of the vendor company. However, this is not the goodwill that will appear in the vendee company’s books.
• Option D: Rs. 2,40,000. This is the difference between the purchase consideration and the net assets of the vendor company, excluding the contingent liability. However, this is not the goodwill that will appear in the vendee company’s books.