A business is required at par when the?

Assessment: JAMB UTME - Principles of Accounts - 2000 Subject: Financial Accounting

Question 1 Report

A business is required at par when the?
Answer Details
A business is said to be required at par when the purchase consideration is equal to the net value of the business being acquired. In other words, the amount paid for the acquisition (purchase consideration) should be equal to the total value of the assets being acquired minus the total liabilities (net value). If the purchase consideration is greater than the net value, it means that the acquiring company has paid a premium for the business, which is usually referred to as goodwill. If the net assets are greater than the liabilities, it means that the business has a positive net worth or equity.
Read lesson note on Nature And Significance Of Accounting (JAMB)
Read lesson note on Principles Of Double Entry (JAMB)
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