Are any of you guys accountants?

[mervhage]

No.

[nurelic]

Not on purpose; or even accidentally for that matter.

NuRelic

[jp]

Not me.

[puckhead23]

I work as an accountant for a hospital. I'll help you if I can.

[carrera]

What is the situation after the aquistion?

Are there still two separate companies? or is it a merger?

The way you put it, it sounds like Company A borrowed money using the assets of Company B to buy Company B and then Company B is paying it back to the bank??

So basically, you should have a loan from Company B to Company A of the amount of the collateral. It should really be Company A paying back the loan unless Company A transferred the debt back to Company B?

If Company B is paying back the loan that Company A took out, there should at least be an intercompany transfer from A to B to cover the pay back.

My company writes accounting software, and I can ask one of the consultants how he would handle it.

[puckhead23]

The way I understand this situation is Company A buys Company B with loan proceeds. Company A has a liability (N/P, LTD, or whatever), and Company B is A's subsidiary. Since A owns B, it has the right to pledge B's assets as collateral.

This sounds like a parent/subsidiary situation, and you probably have to book an intercompany transaction.

Company B:
CR Cash (Payoff of lien to the bank)
DR Due From Company A

Company A:
CR Due To Company B
DR LTD

Our hospital system has 15 separate entities (one of which is a passive parent) and we have book intercompanies like it's going out of style. If I'm misunderstanding something about your particular situation, let me know.

[puckhead23]

No problem. If only poker was this cut and dried.....