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Nominal code - 50% share of asset

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Hi

i am doing the accounts for an art gallery client. i have an invoice from a third party who owns a 50% share in one work of art that the gallery recently sold. i am unsure what nominal code to put it under....if anyone could please advise that would be most appreciated.

Kind regards

Rachel

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By DJKL
28th Jun 2019 16:13

Where did the money(sales invoice) for the final sale go in the accounts of the gallery?

Who owned the other 50% in the work besides the mentioned owner who has now invoiced the gallery? (though for what /what amount we are not told)

If other 50% interest actually owned by the gallery (gallery not just acting as agent) where did that ownership interest arise in the Gallery's accounts?

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to DJKL
01st Jul 2019 11:46

Thanks for responding - the other 50% of work is owned by the gallery.

for more information on the sale of the work - the gallery sold it at auction and have raised a sale invoice for the full sale amount even though 50% belongs to them. They are going to credit the other owner once they are in full receipt of the funds.

i have processed this invoice as a sales invoice but am unsure of how to process the 'supplier' invoice from the other owner. please advise.

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to sarahjanesmith
01st Jul 2019 13:52

I would treat it as a reduction in the sale price:

Say the whole artwork sells for £2000. The gallery only owns half, so their income is only £1000. If you've recorded £2000 as sales income, you need to reduce that by the value invoiced by the co-owner.

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By DJKL
to paul.benny
01st Jul 2019 14:08

Agreed, though if gallery also earns a commission on the 50% sold that was not their property they likely need to raise a commission invoice to the other 50% seller and reduce the sum paid to him/her re that commission.

So if sold for say £20,000

Dr bank 20,000
Cr own sales 10,000
Cr owed to owner 10,000

then

Dr owed to owner at say 10% commision 1,000
Cr commision earned 1,000

then

Dr owed to owner 9,000
Cr bank 9,000

Finally an adjustment in gallery books needed for carrying cost of the 50% the gallery owned

Possibly, if held in stock for resale,

Dr purchases xxxx
Cr carrying stock xxxx

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to DJKL
02nd Jul 2019 10:04

Agree - but the OP did talk of joint ownership. Of course that's where precise language become important.

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