WAEC Accounting 2015 Objective — Question 37

Question 37 of 50 from the West African Examinations Council (WAEC) Accounting 2015 Objective paper, with the correct answer and a full explanation.

Mr White acquired Mr Black's business for GH₴410,000. Total assets were GH₴670,000 and liabilities amounted to GH₴320,000. How much was paid for goodwill?

A. GH₴350,000
B. GH₴260,000
C. GH₴90,000
D. GH₴60,000Correct

Explanation

Net business worth = Assets − Liabilities = GH₴670,000 − GH₴320,000 = GH₴350,000. Goodwill = Purchase consideration − Net worth = GH₴410,000 − GH₴350,000 = GH₴60,000.

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