Where does the profit on sale of asset go?

Where does the profit on sale of asset go?

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If I have some land which was devalued on acquisition and was included in the goodwill calculation at the time. Can the sale of this land at above the revalued price be taken to the P&L rather than against Goodwill.
Damian Taylor

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By djboyd
14th Aug 2002 16:23

1 year window
One other point of note is that there is a 1 year window to revisit the goodwill calculation under FRS7. If the transaction took place within a year of the acquisition then the goodwill should be adjusted. If it is outwith the year then it should go to P&L.

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By neileg
12th Aug 2002 10:05

What do you think?
You attributed a fair value to land on acquisition, so there is a genuine surplus on sale. This goes to P&L.

I presume the goodwill is being amortised. If you are sticking with a life of less than 20 years there is no requirement to carry out routine impairment reviews. However, if the sale of the land is significant, then this may well impact on the carrying value of the goodwill. In this case the resulting impairment should be charged to P&L. This will offset the realised surplus on the land.

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