\(\begin{array}{c|c} & N \\ \hline \text{Plant and Machinery} & 190 000 \\ \hline \text{Motor Vehicle}
\(\begin{array}{c|c} & N \\ \hline \text{Plant and Machinery} & 190 000 \\ \hline \text{Motor Vehicle} & 170 000 \\ \hline \text{Stock} & 60 000 \\ \hline \text{Current Liabilities} & 50 000 \\ \hline \text{Purchase consideration} & 400 000 \end{array}\)
Determine the amount of goodwill
- A. #110 000
- B. # 80 000
- C. # 90 000
- D. # 30 000
Correct Answer: D. # 30 000
Explanation
\(\begin{array}{c|c} \text{Assets} & N \\ \hline \text{Plant and Machinery} & 190 000 \\ \hline \text{Motor Vehicle} & 170 000 \\ \hline \text{Stock} & 60 000 \\ \hline & 420,000 \\ \hline \text{Less Liabilities} & 50 000 \\ \hline \text{Value / Net worth of the business} & 370,000\end{array}\)
Purchase Consideration less worth of the business
400,000 - N 370,000
= N30,000
Goodwill is an asset that can not be seen or touched. It is referred to as intangible asset.
Goodwill is generated as may be the good name ot the business, confident of the customers an the product of the business. It is quantifiable by the management an monetary terms.