Accounting Standard-26 requires that goodwill is to be recorded in the books of accounts onlywhen money or money’s worth has been paid for it. At the time of admission, Vivaan, a newpartner was unable to bring in his share of goodwill in cash, so according to AccountingStandard-26 his:(a) Current A/c will be credited(b) Current A/c will be debited(c) Capital A/c will be debited(d) Capital A/c will be credited

In which type of account does Goodwill effect

CreditorsReserve FundCapitals:ABC40,000 Goodwill25,000 Fixed AssetsStockSundry Debtors30,00025,000Cash at Bank15,00070,0001,35,00030,00060,00010,00020,00015,0001,35,000B died on June 15, 2017. According to the Deed, his legal representatives are entitled to:(a) Balance in Capital Account;(b) Share of goodwill valued on the basis of thrice the average of the past 4 year's profits;(c) Share in profits up to the date of death on the basis of average profits for the past 4 years;(d) Interest on capital account @ 12% p.a.Profits for the years ending on March 31 of 2014, 2015, 2016, 2017 respectively were Rs. 15,000, Rs.17,000, Rs. 19,000 and Rs. 13,000.B's legal representatives were to be paid the amount due. A and C continued as partners by takingover B's share equally. Work out the amount payable to B's legal representatives.tativos Re 44 1581

According to AASB 3, how is goodwill acquired in a business combination recognised? a. As an asset, initially measured at cost. b. As a contingent liability, initially measured at fair value c. As an asset, initially measured at fair value d. As an equity account, initially measured at cost

Example 1The following information is given as at 31 March 20X1P Ltd. S Ltd.Non-current Assets:PPE 2,000 500Investment in Subsidiary 1,000Net Current Assets 2,000 5005,000 1,000Issued Capital 500 1,000Reserves and Surplus 4,5005,000 1,000P Ltd. acquired 100% of shares of S Ltd. on 31 March 20X1 for` 1,000.Since P Ltd. has acquired S Ltd., we will have to determine goodwill / capitalreserve. Let us understand why goodwill / capital reserve arises in case ofconsolidation, and what would be the interpretation of the same.© The Institute of Chartered Accountants of IndiaADVANCED ACCOUNTING10.22In the given case, P Ltd. acquired all the shares of S Ltd. by paying` 1,000. Thispayment (i.e., purchase consideration) would be made by P Ltd. to theshareholder(s) of S Ltd. (hence the transfer of this amount would not appear in thebooks of S Ltd.).By paying` 1,000, P Ltd. has acquired ‘control’ over S Ltd. This acqu isition is quitedifferent from the concept of amalgamation done in accordance with AS 14, thoughthe concept of goodwill / capital reserve is similar. Under AS 14, the targetcompany would generally liquidate, and all assets and liabilities would betransferred from the Selling Company to the Purchasing Company. In case ofconsolidation, P Ltd. is acquiring ‘control’ i.e., by way of acquiring equity shares in SLtd.. Thus, S Ltd. continues to exist, and the assets and liabilities of S Ltd. are nottransferred to P Ltd., but instead continue to remain with S Ltd. only. However, sincein substance, acquisition has taken place (albeit through transfer of control), thepurchase consideration of` 1,000 will be compared with the net worth ofS Ltd., which is` 1,000. Since amount paid (i.e., purchase consideration) equals thenet worth, no goodwill / capital reserve is recognized. In case the amount paid (i.e.,purchase consideration) would be higher / lower than the net worth of S Ltd., suchdifference would be recognized in Goodwill / Capital Reserve respectively.

A and B are in partnership sharing profits in the ratio of 3:2. They take C as a new partner. Goodwillof the firm is valued at 3,00,000 and C brings 30,000 as his share of goodwill in cash which is entirelycredited to the Capital Account of A. New profit sharing ratio will be