Ltd Company buying Shares in another Ltd company

What is the best practice to account for monies paid to share holders in the second company?

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Limited company 1, purchased shares from individuals who between them owned 100% of the shares in Limited company 2, how best does company 1 account for the monies paid to individuals in there management accounts? I assume that the value of shares owned in company 2 should be shown as a fixed asset of company 1? do i use a Shares owned fixed asset accountign code and credit monies to there?

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By paul.benny
03rd Jun 2020 16:25

Yes (although it's a debit, not a credit).

Depending on the size of your companies you might also have to prepare consolidated (group) accounts.

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Replying to paul.benny:
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By walkerma75
03rd Jun 2020 16:51

both companies are under £1m turnover and less than 50 employees, yes a debit of course, thanks

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By RichPort
03rd Jun 2020 23:18

I might be being pedantic but I would suggest that it is an important distinction that these shares are shown as an investment, not as a fixed asset.

They would require a seperate policy and note in the financial statements and therefore I would show seperately in management accounts.

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