Hi everyone I wonder if anyone could help.
I have a client who is property developer and also ltd company- purely buying and selling for a profit, not rental.
One property was bought in the accounting period for which I am preparing the accounts for and refurbished and then sold in next accounting period.
My questions are:
- In terms of costs classification- what is the purchase and refurbishment costs classed as? and where do they go on balance sheet/profit and loss? I am right in thinking that property purchase cost and subsequent refurbishment costs are work in progress and should be show on balance sheet under current asset? Also what about other costs like accountancy fees, legal fees , travel expenses , use of directors home as office etc ?
- The directors (wife and husband) funded the purchase of the property- they confirmed that the had savings and they transferred equal amount of money from their personal bank account to business bank account and the property was paid for from this money. Should I seek additional information for the source of this money ? or just credit it to DLA as a loan to a company.