I have a client who purchased a business and of course didn't do his due diligence or consult me 1st.
Any way later he finds out the business has 150k of outstanding gift cards out. The prior owner will not compensate him for the gift cards. My client has decided to honor the gift cards. In addition he has decided not to sue the prior owner.
I was going to book the cards as a liability and increase the goodwill on the purchase and amortize over 15 years.
Any thoughts on this approach? Different ideas?