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Business purchase account

Balamurugan (Cost accountant) (26 Points)

24 November 2018

Goodwill is intangible asset debit in nature but in while amalgamation business purchase account credit goodwill why?

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Mayur Patil (Article) (1276 Points)
Replied 25 November 2018

It's credited in the books of vendor(seller) a/c because you've to necessarily prepare realisation a/c and all the asset (including fictitious asset) and all the liability you've to transfer realisation a/c

So in the books of vendor following entry you've to pass

Realisation a/c dr
To FA(inc. intangible / fictitious asset)
To CA

After making realisation a/c if there any surplus or deficit should be transfer equity share holders a/c its considered as loss or profit for share holders.

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