Property value

Greetings,
I have 3 properties I bought last year in my LLC. I received the updated valuation, which 1 decreased and 2 increased.
How do I enter those in my double-entry accounting system? I have an Asset
account G/L entry for each of the properties. I can adjust those for one-side, but what account does the other-side go into? Or, do I not track property value until I sell it - then claim the Gain or Loss on an asset?
Thanx in advance for the info. Cevin
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Hi Cevin,
You should not make any entries to reflect changes in value.
You should book the loss/gain when sold.
Rusty

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Assets are held on the books at their purchase cost. There would be a contra-asset account to record the accumulated depreciation (if any is taken). The net effect would be your net book value (purchase cost - depreciation).
When you sell the property you have all the necessary numbers in front of you to compute the gain. Sales price - purchase cost (basis) + depreciation allowed or allowable - your cost of sales (sales commissions, etc).
--
Paul Thomas, CPA
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Cevin wrote:

Land is valued at the purchase price, not the valuation as long as it's on the books: same goes for any fixed asset.
Voracious
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yep...i look at it as "assessed values come and go, but the purchase price is forever"...

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Just a thought... Some people find that having each property in its own single-member LLC is advantageous in terms of liability and, because they are single-member LLC's, they can be treated as disregarded entities for tax purposes.
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I do not know if I misunderstood your question but in this case it is my opinion you need to debit land as an asset and credit cash.

Asset
track
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Land is not adjusted for changes in "assessed value". You record the gain or loss when you sell the land.
It *is* however possible to book impairment on a building, ie. there is a fire and it cannot be used because it is condemned, or you have a significant change in the use of the building and it is no longer suitable to the business that owns it. In that case you would have just the building assessed, or make a judgement on its impaired value and adjust accordingly.
Stephanie Serba, ICIA Durham Business Outsource www.dbo.ca
Moises Figueroa wrote:

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