We have purchased assets for less than they are worth, Can we add them with their proper value so it will show on the balance sheets or will they only show with what we have paid for them?
What have you bought and for how much? No every thing you buy should be capitalised , material and capitalisation policy of business can vary despite some thing being used for more then one year
hi thanks for the reply
We have bought 2 vans and some office furniture valued at £4800.00 for £1000.00 from a guy going out of business, I want the assets to reflect their true value and not what we have paid for them hence making the balance sheet look better. is this correct / right? I think it is due to the fact we have done a profitable deal for the company? hope this makes sense.
Asset revaluation are subject to accounting standards and to be honest with you number of items you bought for the price i would just write them off in P&L and not capitalise at all.
Assets can be revalued once recorded at cost.
sorry i dont really understand your reply. please forgive me as this is a new venture for me.
can you list each asset you bought with price?
yes we can do that…
You need to record assets with value you have actually paid for not the current market value
yes,I understand that, but if they are worth a lot more shouldnt it show as that on the balance sheet? for instance the companies net worth is more that what it would show on paper? I know they are only small assets but as its a new company Iam trying to make it as positive as possible.
btw, what do you mean write it off in the profit and loss account?
Write off mean donot capitalise it at all
Assets can be revalued but initially it has to be recorded on cost
Once recorded then in coming years , business has to have asset revaluation policy, how often (in terms of years) they will revalue assets and either one class of assets or all of it. If revalued up words then it involves asset revaluation reserve accounting with movement in depreciation based on revaluation procedure. All this is for businesses with heavy asset based balance sheets, wont apply to you anyway.
Assets e.g land and building are revalued by professionals e.g Chartered Surveyors.
thats great, thanks for the replies. much appreciated