Where would purchase of customer contract / records, i.e. work in progress go in your Sage nominals? Basically this is for a Company who has purchased previous customers from a previously liquidated Company, been flicking through the standard Sage nominals and it's driving me mad ..... so have given in and reverted to the expertise of the forum!!
I think this would be classed as an intangible asset on the balance sheet. I wouldnt enter on the profit & loss unless an accountant decides he wants it in as goodwill etc.
If this is indeed a purchase from another entity then as Lisa suggests it is an intangible.
However....
just need to confirm something here.
Your client didn't actually own the previous company did he?
If that was the case then the transaction has all of the tell tale signs of being a way of avoiding taxation by putting through a psuedo transaction.
If that is the case then it is highly likely that this transaction is actually illegal and should not be entered in the companies books at all.
In the first instance you would need to talk with the accountant about it. If the above scenario proves to be the case then you might also want to talk with your governing body to get their view on whether this comes under the tax avoidance part of money laundering regulations.
The financial reporting standard related to this is FRS5, reporting the substance of transactions.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
