Acquisition and subsequent closure of Ltd company

Accounting treatment FRS102 1A

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I acquired a new client and I have just discovered whilst preparing the Accounts that they purchased the shares of a limited company (A) for £300K during the year and have an instalment plan in place.  The accounting entries Dr Investment in Subsidiary Cr  money owed have been made. Having downloaded the last Accounts of (A), they show nett assets of £12 and my clients have advised they bought the client list, although no goodwill value was showing on A's Balance Sheet.  They have now told me they want to close the subsidiary in this new fiscal year as it is no longer required and they have taken the customers into the parent company.  What happens to the Investment now sitting on their Balance Sheet, does this convert to goodwill, the customer list does have a value?

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By johngroganjga
10th Nov 2017 07:52

Holding Co. buys customer list for £300,000. Subsidiary dividends up its reserves. Holding Co. writes off investment.

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Replying to johngroganjga:
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By millyandpurdy
10th Nov 2017 09:50

Thank you, I was way trying to over complicate things!

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Replying to johngroganjga:
John Toon
By John Toon
13th Nov 2017 11:50

Isn't what has happened in effect a hive up from the sub?

In which case investment value of £300k becomes an intangible asset - customer list it appears. To be w/off over its UEL. So DR intangibles, CR investment.

Forgive me if this is what has already been explained.

As an aside, under FRS 102 any deferred consideration needs to be discounted if the effect is material.

I assume any considerations in respect of restrictions for retaining the sub, if any, within the SPA have been considered?

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