Balance sheet entries for Director and his Wife

Balance sheet entries for Director and his Wife

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A husband and wife partnership has recently incorporated, with husband as sole director and wife as company secretary, each holding one share of £1 each, 'fully paid up'. A provisional figure of (say) £100,000 for goodwill is assumed, subject to agreement of Share Valuation Division, which will be shown on the company balance sheet as a loan to the company. The rules of the 1890 Partnership Act treat the partners as having equal shares of the goodwill.

The husband's £50,000 share will be shown as Director's Loan Account on the company balance sheet. How is the wife's £50,000 share described (she's not a director, and owns 50% of the shares).

Would it be preferable, if only for the sake of simplicity, for the wife to become a director also. There's absolutely no objection to her becoming a director. Are there any things to consider before taking this step?

John Sharp

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By neileg
20th Aug 2002 16:02

?
Why does she have to be a director to lend her £50k to the company? Anyone can make a loan even if they have no other connection. Call it a particpators loan if you like.

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