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Accounting treatment for buying shares

Can you please help me with accounting treatment if limited company buys shares of another company?

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Can you please help me with accounting treatment if a limited company buys shares of another company? i.e buying less than 10% shares of another company. can you please explain to me the double entry and how will it be shown in the balance sheet?

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By Paul Crowley
09th Apr 2021 21:55

Dr Investment
Cr bank account

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Replying to Paul Crowley:
Routemaster image
By tom123
10th Apr 2021 07:23

Sometimes things really are this simple!

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Replying to Paul Crowley:
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By Tax Dragon
10th Apr 2021 08:18

If I go...

Paul Crowley wrote:

Dr Investment
Cr bank account

Citation please.

...will you all just laugh at me? Or will you realise that I am beginning to appreciate why so few tax answers in here are accompanied by citations (which, for me, is fairly second nature)?

Let's find out....

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Replying to Paul Crowley:
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By Tax Dragon
10th Apr 2021 08:18

Paul Crowley wrote:

Dr Investment
Cr bank account

Citation please.

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Replying to Tax Dragon:
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By tom123
10th Apr 2021 08:29

Basic bookkeeping, innit! :)

Nothing particular tax related.

No different to buying a van.

Now, if you get as far as talking about profits on disposal, taxability thereof, then you may have a point..

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Replying to tom123:
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By Tax Dragon
10th Apr 2021 09:13

Yeah yeah yeah... there isn't a citation. Lots of non-tax questions - lots of answers people in here give every day - don't have citations. It's just taken a really really basic question to make me realise that.

It's a paradigm point Tom. My mindset is different (because every tax question, every tax answer, has a citation. Because tax is a product of law.) People... ok, dragons... see things from their own paradigm, without, normally, realising it.

Hey, ignore me, I'm having a mind-expanding experience. But thank you for laughing with me, not at me, while I do so. (Time for my pills, I think.)

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Replying to Tax Dragon:
Hallerud at Easter
By DJKL
10th Apr 2021 10:54

I suspect if one delved through the Companies Acts plus whatever reporting framework was being observed one might be able to cite why the treatment was correct, or at least consistent with existing legislation (Life is too short)

Effectively define what is being purchased, having likely confirmed it as an asset rather than an expense then consider accounting treatment for what it is (described as an investment) and then get to the answer already given,

Dr Investment
Cr Bank

Though whether disclosed/reported as a fixed or current asset could open an exciting secondary discussion.

Accountancy more than tax also lets one more conjecture as to whether the current approach taken within the adopted standard is logical, there is probably a dissertation in there as to whether current approaches re recognition of asset/cost within accounts is logical and consistent in all circumstances (thus letting the academics free to dance on the heads of their particular pins)

Of course the question of valuation once the first entries made then likely rears its head, but that is an additional question.

I always feel sorry for the credit re purchases, nobody gets into any debate about it, one spends, one reduces the bank balance- what an unfulfilled life the credit re purchases enjoys . (Unlike the credit re sales who has a marvellous time deciding whether it is income or a creditor - which gives me a cunning plan (top secret for now))

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Replying to Tax Dragon:
Hallerud at Easter
By DJKL
10th Apr 2021 10:58

If you want a mind expanding experience draw the curtains, get one of these ball things that displays different colour moving lights over the walls and ceiling, lie down on the floor on something comfortable and a play a quad version of Dark Side quite loud. (Smoking things may also assist or liberal use of alcohol (though tricky drinking whilst lying on one's back))

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Replying to DJKL:
RLI
By lionofludesch
10th Apr 2021 11:07

DJKL wrote:
Smoking things may also assist or liberal use of alcohol (though tricky drinking whilst lying on one's back).

It's what straws are for.

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Replying to Tax Dragon:
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By tom123
10th Apr 2021 11:06

Must admit law was my least favourite uni bit. Heaven knows how I got through ATT as well.

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Replying to Tax Dragon:
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By Hugo Fair
10th Apr 2021 13:09

“If the doors of perception were cleansed every thing would appear to man as it is, Infinite. For man has closed himself up, till he sees all things thro' narrow chinks of his cavern.”
- William Blake, The Marriage of Heaven and Hell (aka Accountants and Clients, or Tax law and Reality)

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Replying to Hugo Fair:
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By Tax Dragon
10th Apr 2021 17:44

What a quote.

Thank you for broadening my horizons yet further.

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Replying to Tax Dragon:
RLI
By lionofludesch
10th Apr 2021 10:57

Tax Dragon wrote:

Citation please.

FRS 105, para 9.5.

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Replying to Paul Crowley:
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By moazzam7871
10th Apr 2021 10:22

hi, Thanks for your reply. if we have bought these shares in another currency then I believe we will use the exchange rate at that date we paid to record the amount in books. Could you also please explain to me how this investment will be presented on the balance sheet?

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Replying to moazzam7871:
Psycho
By Wilson Philips
10th Apr 2021 10:29

Dr Investment

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Replying to Paul Crowley:
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By Paul Crowley
10th Apr 2021 18:25

Fuller details, but giving no citation

Dr Fixed asset Investment

If a fixed asset

Dr Current asset Investment

If a current asset

Detail needed
How long will the investment be held for? Current asset if INTENDED less than a year (as perceived at sign off date if thinking like an auditor)

HOW DID THIS END UP AT THE BOTTOM?
I AM REPLYING TO FIRST RESPONDER
It's just the way Aweb works

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