CA Inter P1 · Chapter 8 · Question 2 of 10
Case: Hiranya Ltd acquired 80% of the equity shares of Sona Ltd for ₹13,00,000. On that date Sona Ltd had share capital of ₹10,00,000 and reserves of ₹4,00,000. Goodwill (cost of control) on consolidation under AS 21 is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹1,80,000
Explanation
Parent's share of equity at the date of acquisition = 80% x (10,00,000 + 4,00,000) = 11,20,000. Goodwill = cost of investment 13,00,000 - 11,20,000 = ₹1,80,000.
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