Hello. Can I have a confirmation that this journal entry makes sense. I am contributing capital to a company. It is real estate with accumulated depreciation on it.
(property is valued at $69,000 with 5,000 of accum. depreciation on the books. Ownership does not "completely change" as the company owners and the previous property owners are the same -- so no taxable event I think)
Is this right?
Fixed Asset (Real Estate) + 69,000 Dr. Accum. Deprec. + 5,000 Cr. Contributed Capital +64,000 Cr.
So the contributed capital is reduced by the amount of accum. depreciation on the books. This seems to make sense, because if i was instead selling the property, my cost basis would decrease by accum. depreciation... so the equity I "have" in it decreases as well when I contribute it to a company.
Thanks!