Hi there! I have a corporate client that sold less than 10% of the corporate shares to a new individual for $10,000. I am filing the T2. I believe this increases the equity account, but does this go anywhere else on the T2 or balance sheet? First time I have encountered this. Thanks everyone for your ongoing helpful advise.
Do you mean the corporation issued new shares from treasury to this individual for $10,000? In that case the debit would be to cash and the credit to capital stock.
Or do you mean that 10% of the issued shares were sold by an existing shareholder to the new individual? In that case there would be no journal entry on the corporation’s books.
Thank you. The corporation issued new shares to the individual.
For the T2, because less than 10% of shares is not a reportable percentage, you do not need to report the details of the new shareholder. But this will impact the holdings of the other shareholders so you will need to review what has been reported and revise as appropriate.
The lawyer should have filed the revisions and other reports as part of the legal procedures for this sale.