Over period of 20 years client has bought/been given building materials
During this period of 20 years these materials have been used to reconstruct/refurbish his private residence
The work has now finished.There is a substantial amount of stock left over.
He proposes to enter into partnership and to start a reclamation business
Your help with the following would be appreciated:
1) How to value the stock when introduced into the partnership
2) Are there any tax implications re the accumulation of the stock and its transfer into the partnership opening statement of affairs?
Many thanks
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Replies (3)
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The stock should be valued at its OMV at the time of the commencment of the business, and is treated as capital introduced in the opening statement.
Reclaimed building materials
But what about the valuation of stock at the first balance sheet date?
On the basis of valuing closing stock at the lower of cost or market value the cost figure would necessarily have to be used
The trading account would look odd!
Also the opening stock-if valued at OMV-would show a considerable increase over its cost
Somewhere in the back of my memory I recall that the increase could have a tax implication when introduced into the partnership?.Maybe not-perhaps my memory!
Thank you for any ongoing advice
Eh?
The cost to the partnership is the OMV ascribed to the stock at start up not the cost to the individual.