I am dealing with a situation where, a few years ago, a company (H) purchased 100% of the share capital of company (S).
H was, and still is, a trading company. S was involved in a similar trade.
The cost of acquiring S was shown as an investment in H.
A few years later it was decided that it would be best to merge the trade of the two companies together. Staff, customers and suppliers all agreed to move from S to H.
Both H & S owned separate properties at different locations, all activities are now being carried out at H. The property S owned has been sold.
The property in S represented a fairly high % of the cost of the investment in H.
Approaching the year end we have a situation where H is still showing the original investment figure. S has large reserves having made a good profit on disposal.
Ultimately the aim is to make S totally dormant and then strike off.
The question is how to net the figures down?
Does S pay a large dividend to H to clear down its reserves and then H write down / off its investment in S?
Can we turn the investment figure in H (less the property value) to goodwill as the company will still be benefiting from the acquisition due to increased customer base and staff numbers?
Any help much appreciated.
Mike A
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Any response?
Mike - I have a similar scenario and have been actively looking for a response to your post. Have you found out the answer from elsewhere ?