question_answer

Assertion [A] :

While calculating capital employed for the purpose of goodwill calculation, the following assets are not included :

(i) Non-Trade Investment

(ii) Capital Work in Progress (building under construction and may take 2-3 years for completion)

(iii) Intangible assets under development (software under development may take 2 more years)

(iv) Advance paid for the purchase of assets

Reason [R] :

Assets which do not contribute in the firm to carry on business or in the operation of the business, should not be considered for the calculation of capital employed.

Choose the Correct Option from the following:

 

A) Assertion and Reason both are correct and Reason is the correct explanation of assertion

B) Assertion and Reason both are correct but Reason is not correct explanation of assertion

C) Both Assertion and Reason are not correct

D) Only Assertion is correct