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Accounting For Shares and Transfers

Accounting For Shares and Transfers

Company BUYINGSHARES bought 100% shares of Company BOUGHT (nominal value 10) for 50k which owned Land valued at £50k.

Company BOUGHT then transferred said Land to Company LANDTRANSFERREDTO (in same group as Company BUYINGSHARES and BOUGHT).

Are these the correct accounting entries for Company BUYINGSHARES

On Purchase of Shares:

Dr Investment in Company BOUGHT 50,000

Cr Bank 50,000

On transfer of property (in Company BOUGHT to Company LANDTRANSFERREDTO):

Dr Impairment 49,990 (where is this shown on BS?)

Cr Investment in Company BOUGHT 49,990

Leaving Investment in Company BOUGHT at nominal value of shares 10

Or do I ignore the transfer as Company BOUGHT is owed 50,000 by Company LANDTRANSFERREDTO for the transfer of the land. 

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28th Nov 2018 16:43

You need to know what the terms of the land transfer were (in particular what price was paid) but you don’t appear to. As will all things to do with accounting, ascertain the facts first. If you don’t know what happened you are not in a position to decide how to account for it.

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to johngroganjga
29th Nov 2018 10:15

Sorry price paid for land transfer was 50,000

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to Phoenix_Tiger
29th Nov 2018 22:48

So why then do you need to write down the investment?

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