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Thread: Property value on the balance sheet

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    Property value on the balance sheet

    Hi all,

    I'm bringing the financials up to date of a company belonging to my parents that holds a property and want to enter this property into the asset register and apply its value to the balance sheet under assets.

    The property's title deed says the property was purchased at value of R60 000 in 1995. Is this the value I must enter in the asset register, and the balance sheet? Or do we apply a new value based on the property's appreciation during this time?

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    Site Caretaker Dave A's Avatar
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    Step 1 is to recognise the asset at its purchase cost.

    When it comes to assets that appreciate in value, the issue from there is whether you should (or want to) revalue the asset from time to time.

    If you do revalue the asset, you will need a valuation, and you'll also need to recognise any known associated liabilities (typically a future tax liability recognised as deferred taxation).
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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    Ok thanks Dave, what would the point of revaluing the asset be? I assume the only time it needs to be revalued is if I sell it in order to establish it's base cost for capital gains purposes correct?

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    Site Caretaker Dave A's Avatar
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    Two situations that come to mind -
    Sometimes companies want (or need) to enhance their balance sheet.
    Sometimes it's driven by a fair value disclosure policy.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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