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?
- Overlap relief 599 16
- Timescale for S455/S458 reclaims 114 3
- Ex-gratia payments 141 4
- Employment status 86 2
- BIM47080 and director training before trade starts 110 4
- HMRC & daft penalty 489 5
- Fee reasonable or OTT? 1,723 21
- Bumper Holiday Pay 124 2
- HMRC Email 191 4
- Hannah's blog post about fish 235 3
- s75 ICTA88 Management expenses - idiots guide 242 12
- Government Gateway 1,066 17
- Intercompany advice 66 1
- Independent Review of a Company Limited by Guarantee 155 6
- How to pay national insurance 414 12
- CIS. Why is it so complicated? 1,766 19
- New Website Look 536 14
- CGT on compulsory purchase cpmpensation re lease 111 3
- Small pool write off 178 3
- Government Gateway/HMRC login details 134 1
- Theatre Tax Relief 472
- Has anyone been affected by the RBS payment breakdown? 364
- Windows 10 on-going support ... 360
- Straight line write off of Purchase Goodwill ??? 332
- Perkbox 297
- Self Assessment - What to enter on the return 285
- Compensation - Taxable or not then CGT or IT 260
- FRS 102 compliant illustrative accounts for an insurance company 255
- Document Management Systems 235
- WIP Software 220