H Ltd. acquired 80% shares of S Ltd. for ₹4,80,000. The paid-up capital of S Ltd. is ₹5,00,000 and…
The acquired share of net assets is 80% of ₹5,50,000, comprising ₹5,00,000 capital and ₹50,000 capital profits. This equals ₹4,40,000. Goodwill is the excess of the…
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H Ltd. acquired 80% shares of S Ltd. for ₹4,80,000. The paid-up capital of S Ltd. is ₹5,00,000 and capital profits on the date of acquisition are ₹50,000. What is the cost of control (goodwill)?
Answer and explanation
Correct answer A
The acquired share of net assets is 80% of ₹5,50,000, comprising ₹5,00,000 capital and ₹50,000 capital profits. This equals ₹4,40,000. Goodwill is the excess of the ₹4,80,000 purchase cost over this amount, or ₹40,000.
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Telangana SET (TG SET)