Purchase of business

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For a business purchase as a going concern, record the identifiable assets and liabilities acquired at their agreed values, and recognise goodwill or capital reserve as the balancing figure. For example, if consideration is ₹100 and assets acquired are ₹120 with liabilities assumed of ₹30, net identifiable assets are ₹90 and goodwill is ₹10:

• Purchaser’s entry: Debit assets ₹120; debit goodwill ₹10; credit liabilities ₹30; credit vendor ₹100.
• On payment: Debit vendor; credit bank.

If the transaction is an asset purchase rather than acquisition of a business, or consideration includes shares, deferred payment, or contingent amounts, the entries and valuation may differ. The journal also depends on whether you need the purchaser’s books or the seller’s books.

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