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Tracey2711


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Fixed Assett
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Hi, the company I am doing the books for has been given ( no monies exchanged) a large piece of equipment which will be a fixed Asset,  its new and has been valued at 5K. They want this inroducing into the a/cs .  Jnl entry, fixed assets / capital?????  

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MarkS


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Hi Tracey

Who gave the company £5k worth of asset without asking for any money?

Is the business a sole trader/partnership or limited company?

I imagine the asset has been given to the business by the owner or director/shareholder?

If so then the journal is

Dr Fixed Assets
Cr Capital Introduced/Directors Loan

If it has been given to the business by another person who was feeling rather generous and they dont want anything for it then the entry would be

Dr Fixed Assets
Cr Sundry Income

MarkS

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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
ADAS


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I can't get my head round where the "value given" part of the double entry exists.


-- Edited by ADAS on Tuesday 8th of February 2011 11:47:51 PM

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Tracey2711


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thanks mark, I know its sounds strange but, it was a bad debt from 5 years, but no longer has that business now. Never thought he would get it, but instead of money he has given equipment of near the same value.  He is a Sole trader. Appreciate all your help Mark.

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gbm


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Hi Tracey,

If the debts not been written off, the £5k will go against their debt.

If the debt has been written off, it will need to go on the P&L. Think it should be cr to bad debt, i.e. reversing a previous write off.

Hope there's no VAT involved!




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MarkS


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Hi Tracey

Agree with Nick

If debtor still in balance sheet then £5k should go against that.

In the unlikely event that it is still on the balance sheet after 5 years it will have probably been written off to the profit and loss account credited to bad debts.

Therefore journal is

Dr Fixed Assets
Cr Debtors (B/S) or Bad Debts (P&L)

MarkS

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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Tracey2711


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Hi Nick, sorry not made myself clear, this was a seperate company which the owner used to own,  which is no longer trading.  (3YrS Ago)  Now set up as a sole trader and this equipment has been given to him for the debt of the closed company. 

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MarkS


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Hi Tracey

Guess the person who owed the £5k had a guilty conscience as assuming the company which is owed the money is now not trading and has now been wound up then they no longer owe the £5k to anyone.

If the company is still active then the asset belongs to the the company, not the owner who is now a sole trader.  So should be recognised in the company accounts not the sole trader's accounts along the lines mentioned in my previous posting

If the company is now wound up and the asset has been given to the sole trader then the entry would be

Dr Fixed Assets
Cr Capital

in the sole trader accounts

MarkS

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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Tracey2711


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Yes Mark, it has wound down, thanks again for all your help, and yes a very guilty conscience from them, and alot of pestering from the old owner!  smile



-- Edited by Tracey2711 on Wednesday 9th of February 2011 07:40:57 PM

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