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purchase of an existing lease??

Hi

Cafe client has moved into new premises..... paid over £15,000. Property was already running as a cafe , leasing of local council paying monthly rent. Client not kept any of fixtures etc so 15k is for purchase of lease only.... Not come across this before -asset??  Help please.....

Cath

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10th Jun 2012 22:02

Cafe purchase

Surely this should be treated as a goodwill purchase and capitalised and amortised accordingly???

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By RICKIEG
11th Jun 2012 08:26

Cafe purchase
Hi
The lease should be treated as a capital item, shown on the balance sheet and amortised over the respective period
You may want to consider if any actual consideration passed for items of equipment that remained on the premises at the time of purchase
A worthwhile consideration is the respective apportionment that would allow the business to operate as a cafe!!

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11th Jun 2012 09:29

thanks

Thanks guys -yes bal sheet /amort was my gut reaction but more I started thinking I wondered how I would class it....

And yes good point re equipment, surely a sink etc etc

Being a sole practitioner, sometimes I just need to hear it from someone else too...thanks

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