Discussion:Purchase of assets but not entire company
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Discussion Forum Index --> Tax Questions --> Purchase of assets but not entire company
| 19 September 2007 | |
| I have a client (C Corp) who purchased a business under an asset purchase agreement for about $200k in personal funds. The company was not purchased - only its equipment, contracts & trade name (dba) were purchased by my client.
I am not sure how this will be recorded on the Balance Sheet of the C Corp tax return - would appreciate feedback on whether I am on the right track.... The Equipment will be recorded at its FMV (about $10k) The balance ($190k) will be an intangible asset (Goodwill?) This ($200k) will be credited to my client's capital a/c. Is this correct? The C Corp is on cash basis if it matters. Thanks for your help. | |
| September 19, 2007 | |
| Credit is to the cash spent. Yes on the rest, as long as the seller agrees. You both file Asset Acquisition Statements. | |
| 19 September 2007 | |
| You could probably record it as CR Capital DB Cash CR Cash DR assets if you want to show this as a purchase by the corp. Didn't really happen that way though. Asset purchase agreemnt would prevail under examination of course so maybe have the S/H contribute assets to the C-corp, credit to capital.... | |
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