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