Fixed assets used as starting capital for another company

1

The company decides to use part of its assets as a starting capital for a new company. This involves moving fixed assets to some kind of an investment account. How do I do that in Manager?

2

You haven’t given many facts to go on, but the basics are simple. Each business is a separate entity, so each business’ records must be separate. So, dispose of the fixed asset in business 1 and create and purchase the asset in business 2. Typically, the disposal value and new purchase value will the current book value from business 1.

3

Disposing the assets would mean they are no longer on the books for business 1? I need to have the value of those assets as an investment. Do I just create an asset account with that amount?

4

This implies, that business 1 is transferring assets to business 2 without requiring business 2 to purchase those assets, correct ?

Not correct, business 1 still has the value but will be classified as investments instead of fixed assets.

E.G. if business 1 transfers 10,000 worth of plant & machinery to business 2 then in business 1’s books the fixed asset values have gone down by 10,000 and the investment values have gone up by 10,000.

You can’t have business 1 having both the fixed assets as well as the investment.

5

Correct. This is what is happening. How to make the changes on business 1 books in manager?

To expand on the question, what I am doing so far is:

The value of the item is being determined by an outside party. Say, they say it is 100.

  1. Dispose of fixed asset.
  2. As a result there is some value on loss on disposal account.
  3. Move the value of loss on disposal on some investment account.
  4. If that is not equal to 100 add the difference to a income account as per determined value to balance the transaction.

So, what I’m basically asking is this the manager-esque way of doing the transactions, or maybe there is something else.

Thanks.

6

I would change the order so that you don’t have to muck around with variations.

So first you would do a Journal using the outside party values. This Journal would debit the investment account and credit the individual fixed asset item with 100 as per your example.

Second you would dispose of the fixed asset item, now any variation between the 100 and the items balance would be profit/loss to the P&L and you don’t need to do any other action.