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easyMCQCUET Accountancy2026Accountancy
1 mark

Excess value of net assets over purchase consideration at the time of purchase of business is credited to:

  1. A
    General reserve
  2. B
    Capital reserve
  3. C
    Vendors' account
  4. D
    Debenture redemption reserve

Solution & Step-by-step Explanation

When a business takes over another firm and the net worth of assets acquired () is greater than the purchase price (Purchase Consideration) paid to the vendor, this results in a capital profit for the purchasing firm. This accounting surplus is credited to the Capital Reserve Account.

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Excess value of net assets over purchase consideration at the time of purchase of business is credited to:
A
General reserve
B
Capital reserve
C
Vendors' account
D
Debenture redemption reserve

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