Good morning,
A quick question (I hope). My business recently purchased another business for $5000, approximately $1500 or which was for equipment. What account would I charge the remaining $3500 to? Would it be an expense account or an owner investment (since the money came from the existing business to buy the new business).
Thanks!
An amortizable fixed asset called Goodwill unless there is something you didn't mention..
It would be a good idea to talk to your tax preparer about this type of question.
Thanks Joanne. I will contact my tax preparer just to make sure. I appreciate the advice.
It's usually placed in the completely fictious account called "Goodwill." You can amortize or expense. The choice (usually) is made based on your tax situation. If you made a big profit this year, you expense. If you lost money this year you amortize. Your tax expert can best advise you on which is appropriate.
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