How to categorize purchase of contract

[mdelgado10]

I have a new client who wrote a check for $100,000. The memo says sale of restaruant. How do you classify this on the books? expense, asset, liability or OE? My guess is goodwill. I dont think he bought the building. I have yet to ask.

[ATSMAN]

I have a new client who wrote a check for $100,000. The memo says sale of restaruant. How do you classify this on the books? expense, asset, liability or OE? My guess is goodwill. I dont think he bought the building. I have yet to ask.

Get a copy of the purchase agreement and see. More than likely this was an asset sale so the amount would have to be allocated between various assets, inventory and goodwill. There is a form 8594 that both buyer and seller have to submit with their return that breaks it down between various categories of assets.

[mdelgado10]

Doing the books how would i classify the check? Expense, asset or equity?

[Maribeth]

Cash suspense until you find out what the check was actually for.