Treatment of goodwill

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Manish Jain (Querist)
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25 September 2012 A Pvt. Ltd. Co. purchased a partnership firm paying Rs.10 Lacs. On the date of Purchase the Partnership firm is having an assets of Rs.198868.56 & a liability of Rs.12000.

Now i want to know what should be the accounting treatment of Goodwill in the books of Pvt. Ltd. Co.

Please help me..

CA. Sandesh Sudhakar Dhomne

CA. Sandesh Sudhakar Dhomne (Expert)
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25 September 2012 If you are following net asset method then the goodwill will be accounted around Rs. 813131.44 ((1000000 - (198868.56-12000))
whixh you should account it as asset in pvt co. as you have purchased the business of firm by paying more than what the net assets were.