minority share buyout

minority share buyout

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I was wondering if anyone can help with regards the accountancy treatment for a minority share buyout.  Does the issued share capital decrease and the balance go to a redempttion reserve? Help!

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By JamesPrice
23rd Oct 2012 09:14

Assuming this is Company Purchase of Own Shares

The payment for shares obviously leaves the bank and is debited to distributable reserves. There is also a debit entry to share capital for the nominal value of the shares purchased with the other side of that entry being to the capital redemption reserve.

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Replying to mrme89:
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By Staceybooks
23rd Oct 2012 11:32

Thanks and yes I thought it was purchase of own shares but now told shares in coy a were split between coy b & coy c. Coy b bought out coy c, so issued shares are the same just different allocation. So where does payment re shares go? :)

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By JamesPrice
23rd Oct 2012 12:28

Eh?

You seem to now be saying that Companies B and C purchased shares in Company A from another minoirty shareholder in which case the payment for the shares does not enter Company A's books at all. Companies B and C would show a fixed asset investment in their respective balance sheets.

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