trade and asset sale

trade and asset sale

Didn't find your answer?

if Co A buys the trade and assets of Co B can the sale proceeds be split to separate out the proceed so much for the website/brand/logos, so much for the customer list and so much for goodwill. Company's B balance sheet includes purchased goodwill pre 1st April 2002 and there are some accumulated trading losses in Co B

Replies (13)

Please login or register to join the discussion.

avatar
By Clinton Lee
14th Nov 2019 16:01

Why do you believe the trading loss in B is relevant here?

Thanks (0)
avatar
By Matrix
14th Nov 2019 16:07

Well the losses won’t be available if it is an asset sale. What is your position, who are you advising, Company A?

Thanks (0)
Replying to Matrix:
avatar
By The Dullard
14th Nov 2019 16:20

Not even any trade intangibles debits?

Thanks (0)
avatar
By paul.benny
14th Nov 2019 16:28

Depends on the accounting standards. Under IFRS it's mandatory to value identifiable intangibles and to fair value the 'normal' assets acquired. Any difference between the aggregate of the fair values and consideration is goodwill.

FRS102 has similar requirements - see section 18.

Both IFRS and FRS are readily available without charge online. Mr Farrow - did it occur to you to search for these yourself?

Thanks (0)
Replying to paul.benny:
avatar
By nick farrow
14th Nov 2019 16:40

thanks Paul I will ask the accountant for the overseas company A

Thanks (0)
avatar
By nick farrow
14th Nov 2019 16:34

Co B is UK resident, Co A is non-UK resident both are 100% subsidiary of non-trading UK holding co so it has to be a market value transaction. The amount attributable to goodwill is a chargeable gain where the pre April 2002 cost plus indexation to Dec 2017 and in year trading loss is deductible.

Thanks (0)
RLI
By lionofludesch
15th Nov 2019 17:33

Splitting the values of the assets is mandatory.

The problem is usually putting fair values on all these assets - which is generally nothing more than one man's opinion as opposed to another.

Thanks (0)
avatar
By nick farrow
15th Nov 2019 17:49

thanks Lion. I need to consider what is included in goodwill and what can be valued separately

Thanks (0)
Replying to nick farrow:
RLI
By lionofludesch
15th Nov 2019 17:51

Everything mentioned above can be valued separately.

And, of course, they may have different useful lives.

Thanks (1)
avatar
By Matrix
15th Nov 2019 21:59

Won’t Company A have a UK PE now? Why have UK- non-UK - UK. There is bound to be some tax leakage.

Thanks (0)
Replying to Matrix:
avatar
By nick farrow
17th Nov 2019 17:03

thanks Matrix - company A is incorporated, managed and controlled and resident overseas it is not allowed to have a PE in the UK. The business it is acquiring from Company B is better conducted from the same overseas territory

Thanks (0)
Replying to nick farrow:
avatar
By Matrix
17th Nov 2019 17:07

OK thanks. So where is the UK tax/accounting issue, who are you working for? If there is no longer a UK business then what do you do and why do you mention B’s losses?

Thanks (0)
Replying to Matrix:
avatar
By nick farrow
17th Nov 2019 17:17

Co B has significant accumulated trading losses but its goodwill was acquired pre- April 2002 for a relatively small amount. I am trying to ascertain what constituents (if any) of a trade & asset sale can be relieved by these trading losses e.g.the website. The sale of the goodwill is a corporate chargeable gain and only the in year trading loss can be set against that gain.

Thanks (1)