cancel
Showing results for 
Search instead for 
Did you mean: 
crystal-berry
Level 1

If I purchase a fixed asset (Equipment) for less than market value, can I show the market value in QB & what GL account is recommended?

For example, I paid $10,000 in 2016 for a brand new machine that was discounted from $50,000.

I would like to be able to show potential investors that the assets I have on hand are worth more than I paid and have not yet depreciated in value.

I have a fixed asset account set up for the machine, but it only records the transaction amount of $10,000.
Solved
Best answer October 15, 2018

Best Answers
john-pero
Community Champion

If I purchase a fixed asset (Equipment) for less than market value, can I show the market value in QB & what GL account is recommended?

Sorry, but the cost principle of accounting prohibits recording a higher value for an asset beyond that for which it is acquired or improved, even if fair market or appraised value rises.

View solution in original post

4 Comments 4
john-pero
Community Champion

If I purchase a fixed asset (Equipment) for less than market value, can I show the market value in QB & what GL account is recommended?

Sorry, but the cost principle of accounting prohibits recording a higher value for an asset beyond that for which it is acquired or improved, even if fair market or appraised value rises.
crystal-berry
Level 1

If I purchase a fixed asset (Equipment) for less than market value, can I show the market value in QB & what GL account is recommended?

I was afraid of that. Thanks!
john-pero
Community Champion

If I purchase a fixed asset (Equipment) for less than market value, can I show the market value in QB & what GL account is recommended?

Now that does not mean you cannot present an appraisal of your fixed assets to secure a loan or entice investors as loan collateral and appraised value may have nothing to do with book value. Consider the case of real property that goes up in value such that you can refinance. You could have property (or equipment) that has a book value of zero because of accumulated depreciation yet you could get a loan against appraised value.
askhertax
Level 1

If I purchase a fixed asset (Equipment) for less than market value, can I show the market value in QB & what GL account is recommended?

I have a different example that I'm hoping someone can help me with. 
Client sold his truck to his corporation for $1.00.

Vehicle value is upwards of $171,996.00

What do I do with this in the S8Class forms in Profile?

The vehicle is registered and has commercial insurance under the Corporation.

 

Thanks in advance for taking the time to help me with this. :)

Need to get in touch?

Contact us