Question

The excess of purchase consideration over net assets of the transferor company acquired by the transferee company should be recognized as ________ in purchase method.

• A. capital reserve
• B. general reserve
• C. goodwill
• D. P&L

Answer 1

The correct option is C goodwill

Goodwill.

Goodwill is an intangible asset that arises when one company purchases another for a premium value. Any excess of the amount of purchase consideration over the value of net assets of the transferor company acquired by the transferee company should be recognised as goodwill in the financial statements of transferee company.