Journal entry for Building

by Jon
(Columbus, OH)

I am doing a church's accounting. It is non-profit and fund accounting. The Building is completely paid off but is not on the balance sheet for what it is worth. We need to put it on the balance sheet and are not sure what to balance it with. What would the journal entry look like to place the building onto the balance sheet?

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Comments for Journal entry for Building

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Valuation of Fixed Assets
by: CPA

Investments are valued on the Balance Sheet at Market Value with adjustments made yearly and increases or decreased in the investments reported in the Income Statement.

Fixed Assets - Buildings, Furniture, Computers, ... are recorded at the PURCHASE PRICE. THEY ARE NEVER ADJUSTED FOR CHANGES IN VALUE. Then yearly depreciation is reported on the Income Statement and Balance Sheet decreasing the total value of the asset.
This means that the value of the assets on your Balance Sheet is not the current value, but this is the proper way to report.

I work for a church with buildings and property with a current market value of $ 9 million. On the balance sheet it is valued at $ 900,000 minus depreciation of $ 900,000, therefore, it is valued at $ ZERO.
Including Asset vales
by: Anonymous

Exactly what I did. In the Capital Accounts, I opened a new account called Prior Period Capital contributions. This collected the value per assessment notices of the church, the parsonage, and the investment funds not shown on a balance sheet. In fact, no balance sheet as such was ever published or kept - just and Income statment. Same BS items had been reported as small reports in the Annual Reports, but almost as an after thought rather than a Financial Report. Building values were not reported anywhere, and some shares had split and almost doubled in value without being accounted for. Only way to update was to put this into Capital. Just remember at year end to close this one year account by absorbing into the overall RETAINED EARNINGS account.
Journal Entry
by: Pete

Usually when a capital item is purchased the debit is to a fixed asset account in this case Buildings and Improvement Account and either a credit to cash if you are paying cash or a Note Payable to say a bank if you are financing the fixed asset.

In this case as the building is paid off the only thing you can credit would be the Capital Account. Usually when the Income Statement is closed at the end of the year the profit or loss is automatically posted to this Capital Account which is known as Retained Earnings. I would establish a seperate capital account called "Capital Property Contributions" or something like that and put the credit there.

As for the amount; you could use the latest property assessement which you can usually find online for that county. Churches are ususally exempt from property taxes, but if you get a statement you can use that value as your basis.

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