Transferring sole-trader loan to limited company
helpme
Registered Posts: 2 New contributor 🐸
I have a client who was trading as a sole-trader then incorporated in 2010.
I am doing the year end accounts and note there is a loan taken out in 2009 by the sole-trader which was transferred to the limited company on incorporation. The value of the loan on the date of incorporation is £11800 but an estimated Market Value of the van purchased with it is only £11000. Does anyone see any problems with this scenario as I think the double entry will be:
Credit Director's Loan 11,000
Debit Vehicles 11,000
Debit Director's Loan 11,800
Credit Loan 11,800
Thanks in advance for your help.
I am doing the year end accounts and note there is a loan taken out in 2009 by the sole-trader which was transferred to the limited company on incorporation. The value of the loan on the date of incorporation is £11800 but an estimated Market Value of the van purchased with it is only £11000. Does anyone see any problems with this scenario as I think the double entry will be:
Credit Director's Loan 11,000
Debit Vehicles 11,000
Debit Director's Loan 11,800
Credit Loan 11,800
Thanks in advance for your help.
0
Comments
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Unless they refinanced I would be very surprised if the loan is in the company's name at all.0
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The loan was transferred to the company.0
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Don't forget the sale of goodwill from Sole Trader to Limited Company0
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deanshepherd wrote: »Unless they refinanced I would be very surprised if the loan is in the company's name at all.
I think they are, but it seems odd to debit a DLA on incorporation. The Dr is either to DLA or Goodwill, I would have thought. For some reason I can't get my head round this one.
Goodwill is only relevant (imo) if it's free goodwill. Though, if it's not free goodwill, I guess a debit to GW is better than to DLA, even though it's not allowable for tax. Gah. Monday. Noodle baked.0
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