Goodwill treatment

Goodwill treatment

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goodwill is being gifted to a company on incorporation rather than sold to attract holdover relief and defer gains.

what are the accounting entries in the Ltd company? does the credit entry still go through the directors loan account?

any suggestions much appreciated.
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By MBK
13th Jun 2008 12:36

There are no entries
By definition, if something is gifted, there is no transaction with a financial value to record. If you make a credit entry to DLA (debiting goodwill) then that constitutes consideration.

Surely though, it at least makes sense to pay £9,500 for goodwill and cover the gain with the annual exemption? Assuming, that is, that goodwill truly has a value. Holdover would then just be claimed on the undervalue.

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