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To be used in conjunction with PDF document entitled Business Purchase Student note
Assets are debited at their agreed values. There will always be goodwill on the purchase of an existing business leave room for it but calculate it at the end
The considerationCredit is a capital for the par value issued mix of share capital and of the shares Dont forget the cash! cash. and share premium for the balance.
71 600
Therefore the goodwill The credit side of the The debit side adds to paid for on purchase is journal entry adds to $225 870. $71 600. $297470
Negative Goodwill
There may be occasions where a business is sold for an amount less than the fair value of its net assets. e.g. Hayward is running a The entry in the books of This may be because the owner would prefer a The change on Worasen Ltds business that shows netthe assets Worasen Ltd to record sale quick sale to a protracted winding up of the balance sheet would be: on his business of $100 000 would be:balance sheet. He an of on the In this instance theaccepts goodwill isoffer credited Assets 100 000 000 business from Worason Ltd books of $80 the Goodwill new 20 to 000 purchases theintangible business. It is still shown under the Bank 80 assets 000 but is a negative number.
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