Share this content

Balance Sheet Adjustment

Balance Sheet Adjustment

Just going through a Ltd Co set of of accounts and have come across the following problem.

Co A's (development Co) BS show a property @ 88k and a mortgage of 65k.

All the relevant documents show that the property and mortgage do not belong to Co A, but Co B (construction Co).

Of information obtained from the Director, it appears that when the original purchase was made, Co A was the intended owner but funding would only be granted if taken in the name of Co B.

To remove it from the BS would leave Co B as a debtor for 23k. This 23k increase is due to payments made to Co B for renovation etc on the rental property.

No interest charges or rental income had been processed through Co B?

Director was involved with Co B, however this Co went into liquidation several years ago and the IP's were not interested in selling the property due to negative equity.

So do I just leave it as a long term Debtor and thus correct the property side of the BS?

It would be handy to write the debt off, but I can not see that being a possible.

Any thoughts.


Please login or register to join the discussion.

04th Apr 2012 17:25

If Co B no longer exists

Then presumably the property belongs to the Crown now?

I can't answer your question, but how will the property ever be sold if the owner no longer exists?

Good luck!


Thanks (1)
By Old Greying Accountant
04th Apr 2012 22:59

Wht about the mortgagee?

Surely they would have exercised their charge and forced the sale on liquidation of B presumably they are accepting mortgage repayments from A?

Sounds like proper legal advice needed!

Thanks (1)
By puzzel
05th Apr 2012 08:55

Ah, the mortgage

is in the name of 3 individuals and Co B, thus a liability on the three remaining individuals.

Mortgage Co obviously had something to do with not forcing the sale of the property.

Just had a look on Co house and Co b was put into liquidation at the end of 2008, but as yet has not been dissolved.

Taxhound, would not think the crown would want the property with negative equity.

O so messy!


Thanks (0)
By Ian Bee
05th Apr 2012 08:57

What did IP do?

I don't understand why the IP were "not interested in selling the property due to negative equity". Even if that was the case, selling the property would have released some funds to pay the creditor at least in part, which I thought was the IP's job in a liquidation.

What did they charge for the liquidation?

Thanks (1)
By puzzel
05th Apr 2012 09:05

IP charges

are not known, as it is an old Co that I have no accounts information on.

Yes you would have thought the IP should have forced the sale of the property to release funds to pay creditors and in turn leave the 3 individuals to settle the buy to let mortgage.

Sorry, but I do not know any more on that part of it. Can only think the mortgage company had an over ruling on this matter. Preventing the sale sort of ensures they get their money without being a preferential creditor.

Thanks (0)
Share this content