Balance sheet treatment of hotel property value

Balance sheet treatment of hotel property value

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Our client is a family partnership which purchased a tired hotel about two years ago. They've spent extensively on repairs and modernisation to bring it into the 21st century.

However, because of the property market collapse it's probably now worth less than they paid for it and we need to consider how this should be addressed on the balance sheet.

Is it necessary to obtain a formal valuation for balance sheet purposes? What is the appropriate treatment on the balance sheet if the value has reduced?
Tim Burr

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