Home – New Forums Money matters Purchasing a business with fully depreciated assets

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  • #1237911
    Nige.C
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    HI All,
    I am looking to purchase a shipping container-cafe, and on their balance sheet their assets have been fully depreciated with the ATO.

    In selling the business they list their assets as a set value, lets call it $100,000.

    In buying this business do I then accept a ‘real’ or ‘market’ value of the physical assets which is diffferent to their depreciation value? In the future can I then account for future depreciation of these assets (considering I paid for them?)

    Thanks for any advice, I can’t seem to find an answer to this online.

    #1237912
    Paul – FS Concierge
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    Hi And Welcome to Flying Solo @nige-c It is great to have you!

    Thank you for joining our community and posting.

    It is an interesting question that I would love to have a go at but only an Accountant can answer.

    Maybe @jamesmillar could answer?

    Cheers
    ~Paul

    #1237933
    James Millar
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    Your depreciable value is what you paid for the asset. What you paid is generally prescribed in the contract. So you can’t just substitute with other amounts (it would be a tax integrity issue – everyone would inflate values).

    Helping build better businesses and better lives with expert financial and taxation advice. info@360partners.com.au www.360partners.com.au 03 9005 4900
    #1237939
    Paul – FS Concierge
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    Thanks for the answer James.

    It kind of seems bizarre to a non-Accountant that an asset can be written-off 100% by one owner and then sold to a new owner for an agreed price and be written off again.

    Pffft – tax haha.

    Cheers
    ~Paul

    #1237941
    James Millar
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    That’s why the tax legislation imposes an upwards assessable income amount on the seller effectively equal to the difference between their tax written down value at time of sale versus what they sell it for. Without that mechanism the ATO would suffer.

    Helping build better businesses and better lives with expert financial and taxation advice. info@360partners.com.au www.360partners.com.au 03 9005 4900
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