Determine the amount of goodwill?

	₦
Plant and Machinery	190000
Motor Vehicle	170000
Stock	60000
Current Liabilities	50000
Purchase consideration	400000

 

A. ₦110 000
B. ₦ 80 000
C. ₦ 90 000
D. ₦ 30 000

Correct Answer:

Option D – ₦ 30 000

Explanation

Assets	₦
Plant and Machinery	190000
Motor Vehicle	170000
Stock	60000
	420,000
Less Liabilities	50000
Value / Net worth of the business	370,000

Purchase Consideration less worth of the business
400,000 – N 370,000

= N30,000

Goodwill is an asset that can not be seen or touched. It is referred to as an intangible asset.
Goodwill is generated as maybe the good name of the business, the confidence of the customers and the product of the business. It is quantifiable by the management and monetary terms.