I have a client (a partnership) with a cafe, this is the third year of doing their accounts.
When I took over the accounts and got the records from the previous accountant there was goodwill still on the balance sheet, even though they bought the cafe a few years previously. I have left in it in the last 2 years but I think it must have to come out now?
Am I able to take the whole amount out in this year? it's only £2,250.00. Or does it need to be taken out over time? in my textbook it looks like it should be taken out in one go straight away (if a partner joins or leaves) but it doesn't say anything about what to do if the business has been bought.
And do I have these journals correct to take it out?
CR goodwill
DR Partners capital account
Thanks in advance for any help on this
-- Edited by rachel_mclean on Thursday 21st of July 2016 10:55:45 AM
I have a client (a partnership) with a cafe, this is the third year of doing their accounts. Individuals as partners?
When I took over the accounts and got the records from the previous accountant there was goodwill still on the balance sheet, even though they bought the cafe a few years previously. When was the goodwill added/what year? I have left in it in the last 2 years but I think it must have to come out now? What is your rationale behind this decision?
Am I able to take the whole amount out in this year? it's only £2,250.00. Or does it need to be taken out over time? in my textbook it looks like it should be taken out in one go straight away (if a partner joins or leaves) but it doesn't say anything about what to do if the business has been bought.
And do I have these journals correct to take it out?
CR goodwill
DR Partners capital account
Thanks in advance for any help on this
-- Edited by rachel_mclean on Thursday 21st of July 2016 10:55:45 AM
Sorry Rachel, in a mad rush as absolutely battered with work. Just a few questions back (also helps bump it!)
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
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