When a business is purchased, any amount paid in excess of the total of assets, minus the liabilities…

In financial accounting (AS-10 / AS-14), when a business enterprise is purchased as a going concern, any purchase consideration paid in excess of the fair value of net identifiable assets (Total Assets minus External Liabilities taken over) is recorded as Goodwill. Conversely, if purchase consideration is less than net assets acquired, the difference is treated as Capital Reserve.