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Share Capital from Goodwill

A partnership has incorporated to a limited company and goodwill has been created and split between cash (to directors loan) and share capital.

My question is; when bringing this transaction into the accounts is there a special share capital account to use, i.e. share premium? special reserve? (assuming this is not a distributable share capital reserve), or would you lump it into ordinary share capital?


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By blok
07th Feb 2013 11:12


better if you provide figures as an example

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By mdoyle
07th Feb 2013 11:39

no problem.

Goodwill has been incorporated at £50k split between £10k in cash (cr to DLA) and £40k in shares.

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By blok
07th Feb 2013 13:45


there is a gain of £50k, of which £10k is chargeable now (i guess covered by the AE) and the balance can be held over into the base cost of the shares.

the shares issued are issued for £40k.  if there are only 100 * £1 shares issued then you are left with £39,900 of share premium.

but i suppose you could issue 40,000 £1 shares.

i think thats right.



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