Partnership to Limited...

[teamjoel]

Hi guys, just after a little guidance...

For various reasons we've recently decided to take all our accounts back from our accountants and prepare them ourselves. As we've changed from a Partnership to Limited, I've just got a few q's to ask.

So here's the scenario;

Started trading Feb '09 as a partnership
Income and Expenditure account was prepared and submitted for period of 09 Feb 2009 (start of trade) - 31 March 2009.

In April 09 we purchased some fixed assets that we want to depreciate over 3 year, straight line Residual value of nothing

Incorporated in June 09 as Ltd. Reported to companies house that started trading as Ltd. 01 October 09.

I'm wanting to tie up all of the partnership accounts now. For the Fixed Assets, would I be correct in appropriating depreciation to the Partnership P&L at an apportioned rate i.e. from purchase date to incorporation date? Then this would allow for the true NBV for which the Ltd. should purchase the Fixed assets at?

Also, for Capital Allowance purposes, how should i appropriate the purchase of the fixed assets in regards to the Partnership accounts? In the same manner as the depreciation?

thanks in advance

[Clare@InTouch]

It's normal to show depreciation as a full year in the year of purchase and nothing in the year of sale (although you can apportion if you'd rather - just be consistent). Do your depreciation in the partnership to arrive at the final net book value.

Find the market value of the assets - that is the value you'd sell to an unconnected third party. Look it up on EBay for example. This is the sale value, and the effective proceeds (not the NBV which may be different). This will create a profit or loss on disposal in the partnership.

The market value you've used in the partnership will then be your purchase price in the limited company. Make sure you raise invoices for the sale of the assets from the p'ship to the Limited.

[THEPUMA]

Hi teamjoel

You can either transfer at open market value or you can elect for the assets to be transferred at tax written down value.

PUMA