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TRM3
Level 1

Quickbook Entries

I purchased a book of business from a financial advisor with no down payment and a 15 year loan.  The purchase is 100% Goodwill because there was no book value or other assets (just the revenue which I paid 1.5 X).  I am trying to figure out how to enter the transactions.  Goodwill is an "other asset" so when making the journal entry into QuickBooks I entered it as a debit for the purchase price of the book and I am crediting Long-Term Liability for the loan amount.  Is that initial entry correct?  Second, when I pay the loan it will be part interest and part principal.  I will reduce the long term liability for the principal amount and add a second line item for the interest expense.  I know Goodwill needs to be amortized over 15 years but I am not sure how or where that entry takes place or what figure I use.  Is the figure the entire payment (P&I) or just the principal portion of the loan?

Solved
Best answer February 25, 2021

Best Answers
john-pero
Community Champion

Quickbook Entries

Your initial entries look correct but after the purchase the loan and the asset are not really tied together.

 

There is in fact no requirement that you amortize Goodwill but if you do you can now do so straight line over 10 years. It would be for the amount originally entered as Goodwill not the loan amount even though for you they match at the beginning. 

 

 

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2 Comments 2
john-pero
Community Champion

Quickbook Entries

Your initial entries look correct but after the purchase the loan and the asset are not really tied together.

 

There is in fact no requirement that you amortize Goodwill but if you do you can now do so straight line over 10 years. It would be for the amount originally entered as Goodwill not the loan amount even though for you they match at the beginning. 

 

 

TRM3
Level 1

Quickbook Entries

Thank you for your input.  This is very helpful!

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