Adding an asset with fees

[covflyer]

I’ve bought an apartment and have a completion statement from my solicitor, which naturally included all the extra costs associated with the purchase. How do I record the apartment as an asset and the fees as legal fees? Thanks

[ian_roberts]

Check with your accountant as I suspect the answer may be that you don’t.

I know when I bought my business I was advised that the costs associated with the purchase form part of the capital amount rather than being a P&L expense for the year of the purchase. And then when I sell the costs of that transaction are subtracted from the sale price when calculating the figures for capital gains.

[covflyer]

So you’re suggesting I allocate it all to the asset? The problem is, when I enter the sale, 0010 code does not come up as an option so I guess I need to enter it another way?

[ian_roberts]

I’m suggesting that you need to check with your accountant as to whether you have to treat the fees as part of the asset or not. I’m not an accountant, I’m just sharing what I was advised in my situation (self-employed partnership buying a business as a going concern) and the rules may be different in yours (real property rather than business goodwill, and you haven’t said whether you’re buying as a self employed individual or a limited company).

If they say that the fees need to be capitalised then yes, I would allocate them to the asset code when you record the purchase (not sale). Or you could create a separate code under assets and liabilities if you want to keep the two elements separate on your balance sheet.