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    teminin's Avatar
    teminin Posts: 2, Reputation: 1
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    #1

    Feb 14, 2017, 10:49 AM
    value re-presentation
    bought a property on auction so it was recorded at cost. Now, for financing purposes I would like to show the property at market value, a significantly higher number. a. was it correct / necessary to initially record at cost in the first place. b. Can I now legitimately create a balance sheet showing the property at market and c. if so how do I get from one to the other w.r.t. entries and explanations.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Feb 14, 2017, 07:04 PM
    It was correct to record the asset at cost, for all intents and purposes that was market value at date of purchase. Revaluation of assets is a legitimate accounting procedure so you increase the value of the asset and create an Asset Revaluation Reserve which is part of Equity. a note to the accounts should state the amount of the revaluation and the date of the valuation as evidenced by a registered valuer. You can expect the financier to carry out their own valuations
    teminin's Avatar
    teminin Posts: 2, Reputation: 1
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    #3

    Feb 15, 2017, 10:38 PM
    Thanks for that Paraclete. A quick follow up; just to verify, is it correct to assume no tax event is triggered here?Thanks again.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #4

    Feb 16, 2017, 05:35 AM
    Quote Originally Posted by teminin View Post
    Thanks for that Paraclete. A quick follow up; just to verify, is it correct to assume no tax event is triggered here?Thanks again.
    I cannot comment on what might happen in your jurisdiction

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