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Asset shouldn't be on balance sheet

Asset shouldn't be on balance sheet

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I have recently taken on a small car repair garage as a client. It is a Ltd company run by husband and wife directors  It had been a partnership and incorporated a few years ago. The premesis is on the balance sheet along with a loan to pay for said building.  When quizzed I learned that the building was in the personal names of the directors - they had done this to protect this from the company's liabilities (and previous accountant was made aware of this) and the loan was from a parent of one of the directors.

I now look to prepare my first set of accounts for them and was wondering what was the best way to extracate the building and loan incorrectly included (and depreciated) in the accounts. Fortunately there is just about sufficiant Director's Loan account to do this.  Should I remove in my year as a disposal?, do I restate previous year? Do I go back further??  I cant see any tax implication of this so I dont have particular worries there - I just want to show a true and fair view.

Any suggestions gratefully received



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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
21st Feb 2012 16:20


My gut feeling is to restate the comparatives (last year) and do a statement of recognised gains and losses in this year's accounts. If there are no tax implications, then the only real issue is getting the accounts right. This approach gets it right going forwards. I doubt anyone at Companies House or otherwise is going to be bothered about correcting previous years. Outlining the situation and potential consequences to the client, I'm not sure they are going to be bothered to pay you to do it either!

This area is not my forte, though, so I stand to be corrected.

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By Chris Smail
21st Feb 2012 19:37

Restate, explain

It grieves me how often we have to do this when taking on clients.


Always ask the previous accountants why they did something, there may be more to this then you realise.

Always check property ownership with Land Regisrty (£4). I fail to understand why some people do not realise that there is a record and they cannot alter facts to suit themselves, but they do.

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