Concept:Buying a business for less than the value of its net assets creates a capital surplus, called capital reserve.
Explanation:First, calculate the value of the net assets acquired: Assets taken over minus Liabilities taken over.
Next, compare this net asset value with the purchase consideration actually paid.
If the net asset value exceeds the purchase consideration, the excess is a gain from acquisition.
This gain is a capital profit, not a trading profit.
Therefore, it is credited to the capital reserve account and not to share capital or goodwill.
Goodwill would arise only if the purchase consideration were higher than the value of the net assets.
Answer:C. capital reserved account (capital reserve).