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Ugur01
September 27, 2024
Solved

Acquisition of Another Company

  • September 27, 2024
  • 3 replies
  • 0 views

Hello,

 

The company bought 100% of another company. What category should I put this expense in for the buyer company?

 

Best answer by Rainflurry

@Ugur01 

 

When you purchase controlling interest of another company, the entry is a simple entry to an asset account.  Assign the payment for the purchase of the new company to an asset account called "Investment in Company XYZ" if it was an asset purchase or "Investment in Company XYZ Stock" if it was a stock purchase.   

3 replies

K
KimAnnVA
September 30, 2024

This should be equity that shows up on the balance sheet.  You will go to chart of accounts and set up a new account with account type equity.  If payments are still being made for purchase of another company, you will need to also create a liability account.  

 

Do not enter Acquisition of another company if it is not purchased under current company name legally. Also if there are multiple owners and only one owner name is on that company, contact an accountant to handle, do not run through current company. 

    Rainflurry
    RainflurryAnswer
    October 1, 2024

    @Ugur01 

     

    When you purchase controlling interest of another company, the entry is a simple entry to an asset account.  Assign the payment for the purchase of the new company to an asset account called "Investment in Company XYZ" if it was an asset purchase or "Investment in Company XYZ Stock" if it was a stock purchase.   

      Rainflurry
      Rainflurry
      October 4, 2024

      @Ugur01 

       

      Not sure why both of these responses were listed as solved when the responses conflict.  In Co. A (buyer co.), the investment is an asset on the balance sheet.  In Co. B (the acquired co.), it is equity.  

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