Question: Taking the data of Example 1, if we consider that GL purchased 30% equity of GHL at a cost of 2,15,000 and there was no

Taking the data of Example 1, if we consider that GL purchased 30% equity of GHL at a cost of ₹2,15,000 and there was no difference between the book value and fair value of the assets. Then show how goodwill is to be recognized. If we further assume that the fair value of net assets increased by ₹1,00,000 over the given net book value of asset ₹6,00,000. Then show how goodwill is to be recognized.

Data from Example 1

On April 1, 2010 Gussain Limited (GL) purchased 30% equity shares of George Huss Limited (GHL) at a cost of ₹1,80,000. The equity of GHL Limited on this date comprised

Equity share capital ₹3,00,000,

Securities premium ₹2,00,000,

Reserve and surplus ₹1,00,000.

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