Sale of advanced bookings when selling a business

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I have a client who is selling her business, they are phtographers

They have been 'paid' the agreed amount for the 'advanced bookings', these are confirmed bookings for photography 

How do I record the bank receipt in the accounts, as a 'intangible asset' ?

Many thanks

Olivia

Replies (9)

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By meadowsaw227
03rd Feb 2023 10:04

If they are "agreed" figures for future sales and the business has been sold how are they intangible assets ?

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Replying to meadowsaw227:
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By Olivia Budd
04th Feb 2023 07:58

Many thanks

Olivia

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By ireallyshouldknowthisbut
03rd Feb 2023 10:05

Its a prepaid sale.

I thoroughly recommend "frank woods" business accounting 1.

Old fashioned but will teach you how to do double entry.

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Replying to ireallyshouldknowthisbut:
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By bigdave1971
03rd Feb 2023 12:05

It would be a prepaid sale (or deferred income) if the business was still trading but surely if it's ceasing then the income should all be brought in immediately?

Unless I have misunderstood the situation and the seller will still be undertaking those future photo shoots?

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Replying to bigdave1971:
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By Olivia Budd
04th Feb 2023 07:58

Many thanks

Olivia

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Replying to ireallyshouldknowthisbut:
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By Olivia Budd
04th Feb 2023 07:57

Many thanks

Olivia

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By Hugo Fair
03rd Feb 2023 11:46

Photography is a very personal service (in the eye of most purchasers of the service), so what does the contract say about the clients' rights if the business is sold?
Unless there are specific contractual terms covering this, I would expect a proportion of those 'agreed advanced bookings' to demand their money back.

Your client should bear this in mind (the purchaser almost certainly will reflect that in the offer price - alongside the fact that the undelivered contracts are a liability).

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By Bobbo
03rd Feb 2023 12:15

If these advanced bookings were already paid for, you would expect the seller to be paying over the amount in respect of these over to the buyer.

If they aren't paid for, and what's been sold is essentially 'potential future income' that the buyer could earn if they complete those shoots, then is the amount received just additional proceeds received for the sale of the business?

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Replying to Bobbo:
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By Olivia Budd
04th Feb 2023 07:58

Many thanks

Olivia

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