How do you create a stub period or short year if your company is sold? I understand that I can remove removes months from the Accounting Periods to have the Year End Closing earlier but how do I create the short period?
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Provisional Reply: When the Company is in consideration for sale, the Timelines., Last Date of Transactions etc. would be discussed and concluded at negotiations.
It is very important that when definite dates are available, these dates are immediately adjusted in IFS. The 1st step would be to correct/adjust the Accounting Periods in IFS to reflect the final dates of operation and the Final Period in the Financial Accounting Year.
You will certainly remove Access to the distant Accounting Period and delete them as those Accounting Periods will not be used.
There would be problems in deleting future Accounting Periods IF Accounting Transactions have been passed to future Accounting Periods. This could have happened due to the following two reasons:
- Periodic Allocation to the future Period for Prepaid Expenses or Periodic Allocation of Accrued Revenue
- Data Entry errors (wrong Voucher Dates)
In the above situation, each Sale of Business must be handled in detail and specifically, as the ERP is designed to handle and record ongoing Business Transactions and NOT Business Termination Transactions.
Finally, you should consider Accounting Periods for ANY possible Post Sales Transactions (Taxation, Audit etc.
If you need to talk to me on a specific case, maybe I can help you.! Please feel free to contact me
Mithila Ranjithan
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Thank you Mithila,
The sale of the company is a change in ownership only. The business will continue operating as before. We just need to produce two sets of financial statements in 2023 for tax purposes. Best case would be to have two 2023 Accounting Years. The first would contain the periods up to the sale date and the second would cover from the sale until the end of the year. Any other idea’s greatly appreciated.
We just went through something similar. As Mithila is suggesting, we changed the end date of a period to the last date under old ownership. We then had one period with 45 days or so and one with 15 days or so. We did not close the year because it was a change in ownership, not operations. This allows us to report through the end of the old ownership period, the new ownership period, and the year as a whole.
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