Accounting for an Acquistion

Accounting for an Acquistion

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My client has bought a smaller competitor and wishs to transfer the trade to its main company. The majority of the purchase price (£100k) was for a stock of second hand equipment which the acquired company had valued in its books at zero, They now wish to transfer the trade to the main company. At the moment they have shown it as a fixed asset investment. I'm planning to follow FRS6 and reflect in the books the fair value of the assets/'liabilities and the balance as goodwill. I need to transfer the stock between the two companies so we can close down the acquired legal entity.

What accounting entries do I make and in which company do I make them for the acquisition. I assume the main company make the FRS6 fair value adjustments in its books and turns the fixed asset investment into the assets/liabilities/goodwill and the acquired company transfers all balances at book value. Is this right and are there any tax implications ?

Thanks......

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By WhichTyler
29th Dec 2015 16:46

Follow the facts...

If your client bought shares in the other co, then its a fixed asset investment in your client company's books. You could do consolidated accounts on that basis and end up with the consolidated bs showing stock & goodwill etc. 

Then hive up trade & assets to the parent: https://www.accountingweb.co.uk/anyanswers/question/hive-trade-and-assets clear the sub's balance sheet

 

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