The double entry to record the good will in the books is ...
Use the following information to answer the question below
Mr White acquired Mr Black's business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.
The double entry to record the good will in the books is debit
Cash account and credit goodwill account
Goodwill account and credit purchase of business account
Goodwill account and credit cash account
Purchase of business account and credit cash account
Correct answer is B
Goodwill is the established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold. In order to calculate goodwill, the fair market value of identifiable assets and liabilities of the company acquired is deducted from the purchase price.
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