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Purchase of Business for £1

Purchase of Business for £1

A business has been bought for £1. However the debt that was taken on was approx £20,000 and the fair value of the assets of the company is approx £80,000. My question is where does the credit for £60,000 get posted - is it a shareholders loan or revaluation reserve ?



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By Ruddles
20th May 2012 08:35

Negative goodwill

At least that's how I've seen it treated.

But it raises a further question. If the fixed assets are eligible for capital allowances, what is the qualifying expenditure? £1, £20k or £80k? I have my own view, but I'd be interested to hear others'.

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21st May 2012 13:48

You refer to a shareholders loan, which implies you've bought already issued share capital in a company for £1.

If that is the case that is the end of it, you've taken on the assets and liabilities of the company as they are.


If you have set up a new company and a business (including debt liabilities of £20,000) is being transferred to the new company for £1 then, to me the price of the assets are £20,001, which you could then re-value to £80,000.

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