H3 Sale of a Business/Property

This workpaper is designed to:

  • record the sale of a business or property
  • identify sale costs that need to be assigned to the book value of the asset

Recommended supporting documents: Sale & purchase agreements, invoices, settlement statements, fixed asset schedule, valuation documents.

Analysis of legal statement

Looking at legal statement, summarise everything that is on this statement. Use this table to identify the different components of the sale price to ensure general ledger is accurately reflecting what was included in the sale.

  1. Enter details from solicitor’s settlement statement into the table.
  2. Legal fees:
    • If legal fees are under $10,000 enter into cell H 18.
    • If legal fees are over $10,000 separate the legal fees in respect of the purchase and finance and enter into cells H16 and H17.
  3. Enter an applicable account code for each time.
  4. Check the Debits and Credits balance.

GST apportionment

This table calculates the GST component of purchase costs which need to be capitalised. The default percentage is 100% or 0% depending on the client’s GST registration, however in some cases GST may need to be apportioned because of exempt items. For example if the purchase is of a rental property, GST rate should be 0%.

  1. Check percentage of GST to claim. If this needs to be amended, make a note explaining your calculation and enter the percentage in cell G28.
  2. Enter details of GST inclusive items recorded in the legal statement analysis which have not automatically pulled through. Make sure you include GST inclusive amounts.

Legal fees under $10,000 are deductible and do not need to be apportioned.

Apportionment

If sale and purchase agreement is silent on the value of the land and improvements value, or the sale price differs from the valuation, this table allows you to apportion the sale price across land and improvements.

  1. Enter details of the valuation being used in cell F40.
  2. Enter details of land and capital value from valuation in cells F42 and F43.
  3. Enter purchase price paid in cell F44.

Sale of business/property

Use this table to record the value of all the asset categories sold as part of the transaction.

  1. Use the valuation or sale and purchase agreement to enter the GST exclusive sale price of the different assets sold.
  2. The associated sale costs that need to be capitalised will be apportioned across the assets sold based on the value of the assets.
  3. Update the fixed asset schedule with the values calculated in the column titled “Total cost (for asset schedule)”.