I have just obtained a new client and in their latest accounts it is showing goodwill of £40k that hasn't been amortised since incorporation 10 years ago. It was the standard sole trader to Ltd company incorporation though this should surely have been amortised evenly throughout the years? How would I go about writing this down to zero. Cr £40k goodwill amortisation Dr £40k directors loan?
Thanks
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DLA?
Why on earth would you Dr DLA?
Is the goodwill of the type where amortisation would have been tax deductible?
So if it's just an accounting question (i.e. with no tax effect) then just amortise it over whatever period you and the client agree is reasonable.
What about Impairment?
If there has been no impairment to the value, why amortise it? If the directors are happy that the accounts give a true and fair view without amortisation, then isn't that allowed under the Companies Acts?
What about FRS102?
I believe, for periods starting after 1 January 2015 under FRS102 you would have to amortise, most likely over 5 years. Unless you apply the Micro entity regime.