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Journal entries selling a company

Journal entries selling a company

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Hi , I wanted to know if you have a client selling there limited company shares and assets to another client , what will the journal entries be for both and the tax implications such capital gains tax , thanks

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By maxmc2
26th Nov 2013 22:54

surely the sale

would be covered under entrepreneurs relief?

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Replying to pauljohnston:
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By HeavyMetalMike
26th Nov 2013 23:00

the tax is 0% or 10%.

Depends who the client selling is.n

or 28%.

so much more info needed.

 

why do you need jnl entries, just stop usingSage you've sold!!!

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Replying to DJKL:
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By Zam23
26th Nov 2013 23:07

Journal entires buyer tax implications seller
Thanks for the swift response, also the entries for the client buying the business , would you post entries from the balance sheet as of that day taking in to account any pro rata depreciation and recognise any goodwill, the business is worth 200k what will be the tax implications for the seller , thanks

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Replying to andy.partridge:
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By HeavyMetalMike
26th Nov 2013 23:24

200K you say.

is that split into assets of differing value? goodwill may then be  in point.

is the seller a  company or an individal? what is being sold?  a company, a business?

are you the accountant for both? be careful of 1) being seen as advising on value 2) giving advise to either unless suitably practiced.

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By maxmc2
26th Nov 2013 23:24

The sale would normally be net book value of assets, any debtors, stock etc and the residual being goodwill

So eg

Fixed assets debit £100K

Stock and debtors £50K

Goodwill £50K

Bank account credit £200K

Assuming they haven't gone over the lifetime limit then it would be 10% tax on chargeable gain

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By Zam23
26th Nov 2013 23:36

Bank account
Thanks you max, I understand that so just to clarify , 200k in the company bank , how will that be offset at the end of the year, as I thought the double entry cr would land in to equity , apologies if I'm wrong , thanks

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By Zam23
26th Nov 2013 23:37

Reply
I'm the accountant for both, and it's a limited company

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By maxmc2
26th Nov 2013 23:53

£200k

in which the accounts of the company that is selling?

 

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By Zam23
27th Nov 2013 00:14

To max
Buying as explained above in your example , thanks , I thought they were opening entries for the buyer

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By maxmc2
27th Nov 2013 00:22

is the

seller of the business going to continue using the company, if not then they are selling the shares of that company so you will not have to account for the sale proceeds just prepare the accounts to the point where it is then sold.

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By johngroganjga
27th Nov 2013 07:59

If this transaction is a sale of shares in a company there are no entries to be made in the books of the company being sold. If the purchaser is a company it debits the consideration paid to "Investment in subsidiary". There is no need to prepare accounts up to the date of completion unless they are required by the sale agreement - perhaps to ascertain the net assets at the date of sale for the purpose of determining the consideration to be paid.

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By johngroganjga
27th Nov 2013 07:48

Your question is causing confusion as you say clients are selling "limited company shares and assets".  If you spell out exactly who is selling what to whom you may get clearer and more focussed assistance.  My response above fits the bill if vendors are selling shares in a company but the company remains intact with all its assets.  If that is not what is happening you need a different response.

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By johngroganjga
27th Nov 2013 08:50

The vendors will be only be entitled to entrepreneur's relief if the company is a trading company and if for at least 12 months before the date of sale they have been employees or officers of the company and had shareholdings of 5% or more each.

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By Tosie
27th Nov 2013 10:11

shares and sale of company

It is important for us to establish what your clients are trying to do. The book entries are a minor detail at this stage and will depend on what is taking place.

Many advisers consider it is too risky to act for both parties and recommend that one or other appoints an independent accountant.I assume that both parties have legal advisers.Tax results can be different for each party,beneficial for one and detrimental for the other.

I know that you have not asked for comments on the above but I cannot see how anybody can give any sort of advice based on what you have outlined so far.

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By Zam23
27th Nov 2013 10:19

Shares and assets are being bought from a limited company which total net assets are worth 160k goodwill of 40k , I hope that helps , thanks

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By johngroganjga
27th Nov 2013 10:26

Doesn't help particularly as you don't explain whose shares the limited company is selling.  Does it own shares in another company?

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By Zam23
27th Nov 2013 11:03

Reply
It has 100 percent ownership and is selling it's 100 % shares to another company, I want to know the opening entries that should take place on the purchase side , thank you for your time.

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By johngroganjga
27th Nov 2013 11:17

So there are three companies - call them A, B and C (?)

B is a wholly owned subsidiary of A (?)

A is selling its shareholding in B to C (?)

Nothing else happens (?)

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By vinnymanes
03rd Jun 2014 01:56

Sale of 100% Shares

Mr John- Here is the Scenario

Mr. A - owns---- 100% Shares of Corporation ABC Ltd. (100 common share for $100)

 

Mr. A--- sold (ALL- 100 shares) -- To Mr B-- for $100,000 

 

Would there be any journal entries in the books for ABC Ltd?

 

Thanks

Vinny

 

 

 

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Replying to RonBlanco:
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By Shunmas
12th Feb 2016 11:26

Did you get any response ?

 

@vinnymanes

Did you get any response ?

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By ianadr
06th Oct 2015 09:44

Handling existing loans to shareholders when buying a Pty (ltd)

Hi

I have just purchased a new Pty Ltd that had a fairly substantial loans to shareholders account as well as a large accumulated loss account.

Am I correct in thinking that although we have bought the Pty Ltd with the view to continuing its business the fact the we are now all new shareholders that the loan accounts are not brought forward? Do I only bring forward all the asset accounts after settling the creditor accounts and the balance being goodwill?

Last question am I correct that the accumulated loss can be brought forward?

Regards

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