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Categorising investment property on balance sheet

How to account for the equity in a fixed asset investment property on the balance sheet?

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Hi,

I have just started using accounting software (FreeAgent) for a limited company property rental business. 

I am trying to understand how to account for the fixed asset (investment property) in the business - specifically how to make a journal entry correctly to show this asset. (Fixed asset was purchased after inception of business but before I started using the accounting software.)

In the journal entry I have debited the value of the investment property under 'Other Capital Asset Brought Forward', and when the property loans are taken into account, the remainder of the value is showing in the Suspense Account as a liability.

What I would like to do is show this amount in the Suspense Account as not in the Suspense Account but as equity. 

Is it possible / correct to do this? If so how? If not, what should I do instead?

I have approached FreeAgent support but don't think I am able to get across to them what I would like to do.

Thanks in advance.

Replies (20)

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By Paul Crowley
18th Dec 2021 15:59

Who submits the accounts and tax computations?

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By tompparker
18th Dec 2021 16:03

Last year it was an accountant; this year it will be me.

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Replying to tompparker:
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By Hugo Fair
18th Dec 2021 16:15

Sounds like a false economy to me - and unfortunate timing.

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Replying to tompparker:
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By David Ex
18th Dec 2021 16:19

tompparker wrote:

Last year it was an accountant; this year it will be me.

Why did you decide to go DIY?

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Replying to tompparker:
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By Paul Crowley
18th Dec 2021 16:30

Company accounts always show comparatives
The start point is to get last year's accounts onto the software
then start posting this year

EDIT
Post the most recent submitted accounts onto the software
Then the currently late accounts entries

Does the current trial balance have entries for share capital and retained earnings?
If corporation tax was paid, how did you post it?

Thanks (2)
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By tompparker
18th Dec 2021 16:22

Partly cost and partly that this year my accountant has not completed my accounts and they are several months late, so I decided to do them myself. Just stuck on this one thing.

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By tompparker
18th Dec 2021 16:22

Partly cost and partly that this year my accountant has not completed my accounts and they are several months late, so I decided to do them myself. Just stuck on this one thing.

Thanks (0)
Replying to tompparker:
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By Leywood
18th Dec 2021 18:10

False economy.

You say you are stuck on this one thing, bet your bottom dollar there are other issues that you are not aware of.

Don’t compound the errors

Thanks (4)
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By Paul Crowley
18th Dec 2021 16:32

If the accounts are already late then be aware the late filing costs change depending on how late
Might be better to get a better accountant to fix it quick

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By More unearned luck
18th Dec 2021 16:45

You seem to be going about this the wrong way.
Step 1: draw up a trial balance after the last transaction in your former accounting system.
Step 2: make sure that it balances.
Step 3: enter the TB as opening balances in your new system.

Note:
If the accounting value of the property is greater than cost then there will be a revaluation reserve a/c.

Thanks (1)
Replying to More unearned luck:
By johngroganjga
18th Dec 2021 18:20

More unearned luck wrote:

If the accounting value of the property is greater than cost then there will be a revaluation reserve a/c.

Not if it’s an investment property. Revaluation gains on investment properties go to P&L these days.

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Replying to johngroganjga:
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By More unearned luck
19th Dec 2021 18:43

Oh. Does that mean unrealised profits can be distributed?

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Replying to More unearned luck:
By johngroganjga
19th Dec 2021 20:49

No. It doesn’t make them distributable, or taxable.

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Replying to johngroganjga:
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By More unearned luck
21st Dec 2021 19:40

Therefore there is a need to distinguish between distributable and distributable reserves. How is this achieved if they lumped together in the BS?

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Replying to More unearned luck:
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By Mr_awol
21st Dec 2021 22:23

You could keep a memo note of them I guess.

We tend to have two profit and loss accounts - distributable and non distributable, on the face of the Balance Sheet. So as you were then…..

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By Paul Crowley
18th Dec 2021 22:47

@OP
there are numerous replies
Firstly decide if the company qualifies for FRS 105

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Replying to Paul Crowley:
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By Mr_awol
21st Dec 2021 22:25

This might be one of the few times I would use FRS105 (although probably not, given the fact that the revaluation doesn’t affect tax in this case. Readily puttable instruments in the other hand….

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Replying to Mr_awol:
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By Paul Crowley
21st Dec 2021 22:45

If I can I do
Iris adds on fully detailed P & L and BS as annexes
Much easier to go through the full thing wth client without loads of esoteric notes as per FRS 102

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Replying to Paul Crowley:
paddle steamer
By DJKL
22nd Dec 2021 09:25

Catch with FRS105 is it can confuse bankers, you just finished telling them that the properties are worth £x but they then see they are stated as £y in the accounts- bankers are nervous creatures easily spooked.

Given property investors seem to spend all their time trying to borrow money I would have always revalued and used FRS102.

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By tompparker
19th Dec 2021 15:11

Thank you very much to everyone for your help. I shall be employing the services of a reputable accountant.

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