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Offline I Jimmy I

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Accounting Paper2 Doubt...
« on: May 11, 2009, 06:42:06 am »
Sup guyz,
As you all know, playtime is OVER!!!!!
The exams start from tomorrow(Accounting Paper2)
Anywayz I have a doubt which I really need to clear out.
Question : Freda purchased a business for $200 000. The net assets of the business were valued
at $170 000.
Name the accounting term for the difference between these two amounts.

Plz answer as soon as possbile.
Thank you! :D
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Offline I Jimmy I

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Re: Accounting Paper2 Doubt...
« Reply #1 on: May 11, 2009, 06:58:58 am »
If some1 would plz attach the June 2002 marking scheme...?
I would really appreciate it!
Thank You
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Offline I Jimmy I

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Re: Accounting Paper2 Doubt...
« Reply #2 on: May 11, 2009, 07:01:50 am »
Anyone????
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Offline Jake

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Re: Accounting Paper2 Doubt...
« Reply #3 on: May 11, 2009, 07:15:30 am »
The Difference is The Goodwill..
When you buy a business you buy it at a price the owner is selling it at.
there is also and extra charge and this charge is known as goodwill.
you are taking advantage of the business's product and customer base that already exists because of the previous owners hard work and dedication


I Hope This helps.. :)
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Offline SGVaibhav

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Re: Accounting Paper2 Doubt...
« Reply #4 on: May 11, 2009, 07:17:47 am »
hi Jason
wow nice one
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Offline I Jimmy I

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Re: Accounting Paper2 Doubt...
« Reply #5 on: May 11, 2009, 07:34:12 am »
Quote from: Jason on May 11, 2009, 07:15:30 am
The Difference is The Goodwill..
When you buy a business you buy it at a price the owner is selling it at.
there is also and extra charge and this charge is known as goodwill.
you are taking advantage of the business's product and customer base that already exists because of the previous owners hard work and dedication

Thank You M8, Altho I already got the answer and again Thank You
I Hope This helps.. :)
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Monica

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Re: Accounting Paper2 Doubt...
« Reply #6 on: May 11, 2009, 09:10:56 am »
ya thats right the answer is goodwill, just remember this formula (my teacher gave it to me), Goodwill = Purchase Price - Net Assets
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