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Use the information below to answer this question.Dangote acquired Dantata's busi...


Question

Use the information below to answer this question.Dangote acquired Dantata’s business for ₦350,000. The total asset work were ₦820,000 and liabilities amounted to ₦640,000The double entry to record the goodwill in the books is debt

Options

A) purchase of business account and credit cash account

B) goodwill account and credit purchase of business account

C) cash account and credit goodwill account

D) goodwill account and credit cash account

The correct answer is B.

Explanation:

when there is excess of purchase consideration over net assets, the accounting entries is to debit goodwill account as the receiving account and credit purchase of business account as the giving account.

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Dicussion (1)

  • when there is excess of purchase consideration over net assets, the accounting entries is to debit goodwill account as the receiving account and credit purchase of business account as the giving account.

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