Investment in partnership - accounting treatment
My client a UK company has invested in a property investment partnership as a limited partner. The partnership has reported a loss for the year and this has been allocated (adjusted for tax purposes) to the partners according to their share.
I have had conflicting views from colleagues regarding the accounting treatment of the investment and apportioned tax losses.
I had originally planned to account for the investment at cost (providing that NRV per the directors is considered to be higher) and to just disclose the apportioned tax losses in the accounts as a note in the corresponding investment note. Accordingly when the partnership starts making a profit then it would seem appropriate to disclose any share of taxable profits apportioned to the company as limited partner and to account for those that are distributed.
Obviously for tax purposes, apportioned tax losses and profits would be included in the company's corporation tax return, with the view that the disclosure in the accounts of these apportioned losses and profits would help readers understand the full picture.
However it seems that some would account for the apportioned losses and profits even if not yet distributed and adjust the carrying value of the investment accordingly.
Is either method acceptable and does anyone know of any point of reference for this?
- Goodwill gesture for providing work 411 12
- What would you do in this situation? 101 5
- Filing a P87 (professional fees) before year end. 120 2
- Recommendations for payroll/AE software? 598 13
- More HMRC on gov.uk 622 11
- Rollover relief - when does gain crystallise in this situation? 74 1
- Offshore company transferring assets to a UK individual. 339 14
- Interest Free Loan - Salay Sacrifice? 240 4
- Research and development - repayment timescale 216 5
- VAT reconciliation and VAT return on Sage 96 2
- Sole trader hid directorships. 379 6
- Halloween - do you celebrate it? 1,389 46
- Enquiry into tax return - how co-operative would you be? 300 5
- NOVA 548 1
- Clearing payments on account/ Sage 50 269 10
- Regional Development Grant 114 4
- Problem ex client...again.. 2,389 21
- Company car without a salary 227 2
- Charity donations 1,076 21
- Interest on HMRC contract settlement 148 2
- Bonus Bonds 390
- Insolvency and whistle blowing 377
- Transfer of funds into recently set up company 288
- TPR imposes first penalty notice fines 256
- Box 8 VAT Return - deposit payment 185
- Husband proposes to buy the car as Director unable to acess finance 171
- Finance Lease 155
- Company Car Lease 152
- Form 42 147
- Demerger Reserve 129