Hiving down

Article Abstract:

Hiving down refers to the practice of transferring the trade and assets of a firm to a newly formed company, and then selling the subsidiary to a third party. Hiving down is the easiest way to sell a company when a straightforward sale of shares to a third party is not possible. For tax purposes, there are a number of pitfalls in this procedure that need to be considered. Both the transferee and the transferor must be in the same trade, and the transferor must have beneficially owned the transferee. Trading losses will not be allowed to be carried forward by the third party if a major change in the trade has taken place prior to the transfer, or if the hive down is from an insolvent company. Value added tax and capital gains taxes must be paid for certain types of transfers. The position of the shareholder in the hive down is also discussed.

Management, Purchasing, Mergers, acquisitions and divestments, Subsidiary corporations, Subsidiaries, Business enterprises, Liquidation

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Valuation of brands: the RHM approach

Article Abstract:

The decision by Ranks Hovis McDougall PLC (RHM) to include brands as an asset in their September 1988 balance sheet has caused controversy because: it initiated a new trend in reporting practices; it raises issues about the usefulness and purpose of annual accounts, and it caused RHM to allow the value of brands to account for 59% of their total assets. Accounting experts question the suggested valuation basis because it does not seem to connect to any specific potential or actual activity and may, in fact, increase the present difficulties of financial reporting.

United Kingdom, Methods, Accounting and auditing, Accounting, Trademarks, Business names, Ranks Hovis McDougall PLC, Great Britain

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