Wondering how to account for a novation of a business line versus a rebranding of a business? What are the differences in
Different accounting treatment for novation versus rebranding?
Answers
Can you please clarify a bit? Novation as I know it means that an existing contract is replaced by a new contract. e.g. company A sells to company B and company B transfers their obligation to company C under a 3-way legal agreement. Thus company A now has a deal with company C. Your question asks for accounting for this transfer in position, but I think we (the community) needs to know more specifics and I, for one, am tripping over the first part of the question in that you are novating (SP?) a business line vs. rebranding it. Did you buy a business? Or did you sell a business to a 3rd party who has existing obligations to you (e.g. ongoing payments) and they sold it to another party, thus the concept of novation? Hoping a little more guidance will make answering easier.