UK On Goodwill After Transfer Of Ownership


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Hi all
first time poster here

I'm working on a company that where ownership of said company is set to change hands. Owner bought said private company A at 100, and sells it at 200.
With the new ownership, I understand that there is a premium of 100 to be booked, supposedly into goodwill, just to keep things simple.

Can someone walk through the high level mechanics of how that works? Essentially, I thought the original owner walks away with 100 in his pocket, but Im told that is not the case. I was too afraid to ask why.

Thanks
 

Fidget

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If it's owned outright by one person and it's a clean sale with no conditions attached, then just like selling anything, the gain/loss is the difference between the selling price and cost, and the seller pockets the profit. It's taxable though.

If it's not owned outright, then other investors are entitled to a share of any gain on disposal. Or there could be conditions attached to the sale.

So it all depends on circumstances. You'd be better just asking whoever it is you were afraid to ask rather than me getting the crystal ball out.
 
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If it's owned outright by one person and it's a clean sale with no conditions attached, then just like selling anything, the gain/loss is the difference between the selling price and cost, and the seller pockets the profit. It's taxable though.

If it's not owned outright, then other investors are entitled to a share of any gain on disposal. Or there could be conditions attached to the sale.

So it all depends on circumstances. You'd be better just asking whoever it is you were afraid to ask rather than me getting the crystal ball out.
Thanks a lot!
The ownership isnt not outright. Say 75% of the ownership is transferred to a consortium. Regardless of the conditions, perhaps on a high level perspective, is it the case that the premium would then go towards goodwill, assuming all else equal? If so, why is that?

Thank you
 

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