If Vendors are issued debentures of Rs 80 000 in consideration of net assets of Rs 1 00 000 the bala...........

General Accounting Principles Accounting For Debentures

If Vendors are issued debentures of Rs.80,000 in consideration of net assets of Rs.1,00,000, the balance of Rs,20,000 will be credited to :

Statement of Profit & Loss

Goodwill Account

General Reserve Account

Capital Reserve Account

Purchase consideration can be paid off either by cash or issue of shares.

If the purchase consideration > net assets worth, the difference amount will be considered as payment of goodwill.

If the purchase consideration < net assets worth, the difference amount will be considered as capital reserves.

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