Share of freehold company accounts advice

I'm filing my company accounts for the first time.

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I am filing my company accounts as a director of a freehold company. I bought the property earlier this year. The previous owner always filed the accounts. 

I'm going to make the accounts dormant as we don't trade, but am having some trouble working out the numbers. 

There are two shares in the company, of which I own one and the other owner downstairs owns the other. 

Every year the company accounts show fixed assets of 5134 but a credit liability of 5132, leaving the total net assets at £2. I'm confused as to why the 5132 is shown as a credit every year when this was the value of the freehold purchase and was just a one time payment.

Should my total current assets be 5134 or 2?

 

 

Replies (18)

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By Wanderer
14th Jan 2024 11:39

Think about where the £5,134 came from to purchase the property.

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Replying to Wanderer:
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By KJT123
14th Jan 2024 11:46

Wanderer wrote:

Think about where the £5,134 came from to purchase the property.

I'm not sure what you mean? The freehold was purchased using that money split between two parties. I only bought the property in April this year.

The accounts ever since they have been set up have shown a credit liability of 5132 every year, but this was just a one off purchase almost 20 years ago.

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Replying to KJT123:
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By Wanderer
14th Jan 2024 11:59

Yes, I guessed all that.

Sounds like to you need engage an accountant as your knowledge & understanding isn't sufficient to prepare accounts.

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Replying to Wanderer:
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By KJT123
14th Jan 2024 12:03

Wanderer wrote:

Yes, I guessed all that.

Sounds like to you need engage an accountant as your knowledge & understanding isn't sufficient to prepare accounts.

Thanks, that's unfortunate because I was told this was all very simple and can be done in 5 minutes.

You're right I don't have any knowledge of accounts and thought it would be as simple as making it dormant and copying the accounts for the past three years which have never changed.

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Replying to KJT123:
By johngroganjga
14th Jan 2024 12:42

And another point is that you say you bought the property, when if fact it seems that you must have bought a share in the company that owns it, which is a completely different thing altogether.

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Replying to johngroganjga:
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By Justin Bryant
15th Jan 2024 14:14

But he wouldn't own such a share in the 1st place had he not bought the leasehold (at the same time probably).

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Replying to Justin Bryant:
By Ruddles
15th Jan 2024 14:27

Why must he hold the leasehold? He might do, but I can't see anything in the thread to suggest that he does - only that the company owns the freehold.

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Replying to Ruddles:
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By Justin Bryant
15th Jan 2024 16:36

How many punters here just buy shares in a freehold company without the associated lease? None is the simple, obvious answer. (You are really outdoing yourself today I must say and if you're suggesting there's no lease here then that's beyond dumb.)

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Replying to Justin Bryant:
By Ruddles
15th Jan 2024 16:52

Justin Bryant wrote:
How many punters here just buy shares in a freehold company without the associated lease?

I don't know about any punters here but I could immediately name 3 people that purchased a company holding freeholds to properties but which 3 people do not hold the leaseholds. Yes, the individuals will typically hold the leasehold, but it does not automatically follow, as you appear to suggest. I now expect you simply to say that my case is the exception that proves the rule. Whatever.
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Replying to KJT123:
RLI
By lionofludesch
14th Jan 2024 17:39

KJT123 wrote:

You're right I don't have any knowledge of accounts and thought it would be as simple as making it dormant and copying the accounts for the past three years which have never changed.

Dormancy is based on facts.

It's not something you choose to do.

I think you need to accept that you're probably not up to this, dormant or not.

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Replying to KJT123:
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By David Ex
14th Jan 2024 21:33

KJT123 wrote:

Thanks, that's unfortunate because I was told this was all very simple and can be done in 5 minutes.

But did you have any reason to suppose the person who told you that was sufficiently qualified to opine? Very dangerous to take the word of someone with questionable knowledge - in any sphere of life.

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By FactChecker
14th Jan 2024 13:20

OP - it's all clear as mud (in terms of who bought what and everything that flows from there):
- "my company" vs "There are two shares in the company, of which I own one"
- "I bought the property" vs "the other owner downstairs"

.. and that's before we get to areas of complete guesswork, such as:
- if there are two 'properties' under one Freehold then presumably there are two leasehold agreements? And if so, these will usually include liabilities (or even payments) that may mean dormant accounts aren't appropriate.

It's too late in the day to wonder how you managed to end up buying something of which you appear to be uncertain ... but an urgent appointment with your accountant would be sensible.

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By AdamJones82
14th Jan 2024 19:33

The accounts aren't dormant

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DougScott
By Dougscott
15th Jan 2024 09:06

Suspect the £2 is two £1 shares....

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paddle steamer
By DJKL
15th Jan 2024 14:52

Okay, Guesswork:

Each leasehold property within freehold owns 1 £1 share. On purchasing your leasehold one of these transferred to you.

The original cost of freehold was £5,134

When freehold acquired by the company it was mainly funded by loans from the then leaseholders totaling £5,132, likely £2,566 each

A share of this loan(possibly £2,566) likely transferred as owing to you as part of your purchase of the leasehold you own, get your solicitor to confirm this is the case.

Once facts established accounts hopefully can then be prepared.

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Replying to DJKL:
By Ruddles
15th Jan 2024 14:56

Again, while I understand that it is common for leaseholders to also 'own' the freehold, via a limited company, I can't see anything that says this is necessarily the case here. I do acknowledge the second word of your post ;¬)

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Replying to Ruddles:
paddle steamer
By DJKL
15th Jan 2024 15:17

I ran with "I bought the property" as having to be the leasehold as the freehold seems to be owned by the company and if one bought the freehold from the company why would you then need to prepare the seller's accounts?

But, as you acknowledged, mere guesswork by me (We do not really hold property via this approach up here in Scotland, whilst we do have odd long leaseholds on commercial property we do not on residential due to the 1974 Land Tenure Reform (Scotland ) Act )

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Replying to DJKL:
By Ruddles
15th Jan 2024 15:42

I ran with "I bought the property" as meaning "I bought (a share of) the company that owns the property". I guess that I'm too used to seeing people here confusing themselves with their company.

But who knows?

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