Can I turn historic expenses into fixed assets?

I want my balance sheet to show that I have assets but I have been a lazy bookkeeper

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Hi, thank you in advance.

My business is a learning focused children's 'play area' where I continually update and add to different parts of the premises, rooms etc. to make the service I offer more engaging for the little ones

Over the past 3 years I have been adding and taking away from the 'shop floor' and have been just recording anything that I pay for as merely an 'office expense', I know, really lazy.

The reason I put them down as office costs is because there wasn't any one big purchase (like a piece of machinery), it's more things like wooden panels, paint, screws, posters, nets etc. it's all kinda small ad-hoc payments all put together in a certain way so that the fixture as a whole is a valuable asset

Now my business has grown, making a decent profit, and I have a reasonable investment in these physical assets and they aren't going anywhere. They are how I generate revenue but my balance sheet still says I have £150 for a camera system only, it's not reflective of the business as I have an entire shop floor that someone buying the business would consider a valuable asset.

I have an idea in my head roughly how much money went into each part of the shop floor (I have a budget which I exhaust to create it) but I can't specifically point at a part of it and say "that there is worth £500" for example, it's all a sort of amalgamation of lots of pieces of equipment, furniture and building materials

I know from my degree that there's some flexibility on declaring something as an asset and valuing it but I'd appreciate any comments on what to do with this. Is it even possible or am I stuck with a huge profit/loss brought forward at the bottom of the account and a tiny amount of assets at the top?

Replies (4)

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RLI
By lionofludesch
08th Jan 2021 16:06

£500 ?

I might not capitalise that anyway. It's small.

But - in any case - you made your decision. Too late now.

Live with the consequences.

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John Toon
By John Toon
08th Jan 2021 16:11

Sounds like you want to go back and change history in which case any changes would be prior year adjustments. In reality this is something your accountant should have discussed with you and could advise you appropiately on as there may tax consequences to the changes you're considering.

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By Truthsayer
09th Jan 2021 11:53

Anyone buying the business would only care about the underlying profit history and the value of realisable assets. The historic cost of balance sheet fixed assets would be of little interest. You are wasting your time by thinking about this.

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By User deleted
09th Jan 2021 17:44

'Posters' !!

Your balance sheet shouldnt 'still' show the camera value at £150.

Oh dear!

I do, however, love your description of 'top' and 'bottom' of the account so might change the descriptions on all future account filings.

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