We’re looking to lease a shop space that has a certain hardware installed. The landlord is specifically stating those items will become or property but there is no money changing hands for those items. They are heavy items of hardware particular to the type of business we’re running (large gas cookers, fridges, freezers, etc).
It’s a condition that we take these items on, and because they are useful to us, that’s not an issue. These are not small ticket items and combined their value would be in excess of $15K. They will become assets from day 1 and will immediately add value to the business, but have no value that I can think of that would be recorded in manager. ie, they’ve never been an expense.
Entering them as fixed assets doesn’t seem to be right since they have no purchase price and/or accumulated depreciation. Or do they have a purchase price that is automatically depreciated at the time of handover?
The problem as I see it, they aren’t an expense or a depreciative object as far as any tax would go, but they are a part of the assets of the business and have an intrinsic value.
You should consult a local accountant. Depending on your jurisdiction, you may be required to capitalize these assets at a fair market price or at some estimate of the worth they add to your business. Or you may want to enter them into your register of fixed assets as fully depreciated, anticipating the day when you might dispose of them, possibly with a gain. They could also have a scrap value and might have to be accounted for in your lease process, even if they are not further depreciated in the future.
Whatever the correct approach to such things is in your jurisdiction, Fixed Assets is the place in Manager to handle it.
Thanks, that is where i’ve put it for the time being.
Lease wise, they’re ours and once we’re in they wash their hands of them to the extent that when we go, we have to take them with us (unless we can offload them to the next tenant).
I’ll add it to my list of questions for the accountant. It’s starting to get a bit lengthy
If you want to take those assets up with a valuation other then - fully depreciated - then create an BS Equity account called Asset Revaluations and post the contra entry there.
