Question

If the net assets are in excess of the purchase price, the difference is __________________.

• A. Credited to capital reserve
• B. Credited to goodwill
• C. Debited to capital reserve
• D. None of the above

Answer 1

The correct option is A Credited to capital reserve

If the purchase price exceeds the net assets, the excess amount is debited to Goodwill Account; and if the net assets exceeds the purchase price, the excess amount is credited to Capital Reserve Account.