Adding Land & Building

[onemore4gsus]

Currently, building value and land value have an account in our Chart of Accounts but no one ever entered the values there.

From a previous post, I see that to add building value: DR the Asset account, Building and CR the Equity account,Unrestricted Net Assets.
To add land's value, do I likewise DR the Asset account (land) and CR the Equity account, Unrestricted Net Assets?

How do I determine the values to enter at this time? Use the County assessment?

The mortgage is paid off.

Thank you.

[NeilZ]

Currently, building value and land value have an account in our Chart of Accounts but no one ever entered the values there.

From a previous post, I see that to add building value: DR the Asset account, Building and CR the Equity account,Unrestricted Net Assets.
To add land's value, do I likewise DR the Asset account (land) and CR the Equity account, Unrestricted Net Assets?

How do I determine the values to enter at this time? Use the County assessment?

The mortgage is paid off.

Thank you.

FWIW .. you really don't need to keep that information in the system unless you and your church board want to. It can cause some confusion if its kept in the same Accounting Fund as your operating fund.

What we determined was that we'd keep that info in a separate Accounting Fund called Assets, this allows the Operating Fund to show an accurate balance of our liquid assets, without skewing that balance with the 'solid' assets such as the building.

As far as the entries, they are correct. In determining the value, if the paid cost of the building is more than the assessment, then I'd use the real cost as that is the value to the church. That said, if its been a few years since its been paid off, and you'd rather not have to consider depreciation, use the assessment.

[NHCSecretary]

I think i have a similar problem.

I just took over the book keeping for my church and fixed assets / liabilities were never entered into PC - so I've entered them in...

The problem is my balance sheet does not balance anymore. take a look.

Our building is now valued at 3.375m but our mortgage is less because we have been paying it off for several years now.

But i dont know how to increase the starting equity without debitng an asset or expense account(which would than reduce fund balance)

help!

[NeilZ]

Um ... you really don't have the full 3.3 million in equity as long as you still owe 1.5 million on the mortgage.

I hope you kept a backup before you did this.

[NHCSecretary]

Um ... you really don't have the full 3.3 million in equity as long as you still owe 1.5 million on the mortgage.

I hope you kept a backup before you did this.

You're right. Our equity should be 1,918,250.56 so the balance sheet matches.

Our assets/liablities were never entered from the start(years ago) so i had to enter them for the start of 2017.

So in my mind, i need to credit the equity account to increase it to 1,918,250.56 but i don't know what to debit? because i don't want to add anymore value to any assets. and the expenses for the building/land mortgage payments have already been expensed for years(with no reduction in liability acct, because no liability account was ever setup!)

Maybe I'm way off here. but it seems like an accounting impossibility. I'd like to just credit the starting equity account so my balance sheet matches.

[NeilZ]

You may want to view this thread .. sounds like this would help you figure this one out.

https://www.powerchurch.com/forum/viewt ... f=3&t=9425

[NHCSecretary]

I read the thread.

I'm still at a loss - as to what to debit.

My asset values are correct. My liability values are correct.

So how do i increase by beginning equity to 1.9m without debiting an asset account? Thus making my balance sheet out of balance.

[NeilZ]

I read the thread.

I'm still at a loss - as to what to debit.

My asset values are correct. My liability values are correct.

So how do i increase by beginning equity to 1.9m without debiting an asset account? Thus making my balance sheet out of balance.

So how did you enter your building asset?? How did you enter your mortage liabiilty ??

Reverse those two transactions, then create the transactions for building Asset and Mortgage Asset as shown in the second entry in that thread.

Remember, the building asset is the initial value of the building (or the current valuation), minus the mortgage.

[FBCro]

I'm not sure how to handle Land and Building. I took over handling our books in January after a paid accountant had handled for a year and our small Church couldn't afford. I knew nothing about the system but have studied book and feel more comfortable now. My problem is I don't see our Land and Building anywhere in Power Church. Where is the Asset? The Balance sheet does not list it. It just shows our Checking account. We have a $400,000 balance on our property that originally loan was for $600,000. We are paying our loan payment each month but I don't know where the asset is shown? I would have thought a CPA would have handled properly.

[NeilZ]

I'm not sure how to handle Land and Building. I took over handling our books in January after a paid accountant had handled for a year and our small Church couldn't afford. I knew nothing about the system but have studied book and feel more comfortable now. My problem is I don't see our Land and Building anywhere in Power Church. Where is the Asset? The Balance sheet does not list it. It just shows our Checking account. We have a $400,000 balance on our property that originally loan was for $600,000. We are paying our loan payment each month but I don't know where the asset is shown? I would have thought a CPA would have handled properly.

FWIW ... you really don't have to include your land in the system. Its not a requirement. However,

That said, is the loan shown as a liability in the system?

[FBCro]

The loan is not shown as a liability.

[NeilZ]

The loan is not shown as a liability.

OK ... that explains the lack of the asset.

You can continue to not have a mortgage liability or a land asset. I don't know how 'small' your church is, but right now you're doing fine tracking your income and expenses, and your mortgage payment shows up in the expenses. You're showing the church your current financial position. I would continue to give a report on the remaining balance of the mortgage on a monthly basis to your board, and a yearly basis to the congregation.

However, when the mortgage is paid off, I'd add the building asset at the $600,000.00 cost.

To do that add an account to your COA under the fixed assets - buildings area (these are default entry headers) for the building.
for this example: 01-1610-000 Building

Then create a transaction in Funds Accounting that DEBITS that account 01-1610 for 600000.00
and CREDITS the unrestricted net assets 01-3110 for the same amount.

However, that does tend to show that there's more assets in the operating fund than is liquid, which can confuse some people. What we did was create a separate accounting fund AS for such assets, and added the building assets there.

[FBCro]

Our Church is small run about 60 people. Thanks so much for the information. One other question I have about this subject. Last November our Church sold a parcel that was not attached to our Building and Land. The Bank took the 150,000 to reduce our loan since all the properties were part of the Loan. They allowed 29,000 of the 150,000 to remain in an escrow account that we could use for needed repairs. We would have to take an invoice for the work to the Bank and they would deposit that amount (example 5,000 of the 29,000) in our checking account to pay the invoice. Since the escrow account in not on our Books I'm not sure how we will show the transfer to our checking account from the Bank. We cannot use the escrow for anything except repairs or if we decide we can apply to the balance of our Loan. How would I show the funds the Bank deposits in our checking account and should we have shown the escrow on our Books. Thanks again

[NeilZ]

Our Church is small run about 60 people. Thanks so much for the information. One other question I have about this subject. Last November our Church sold a parcel that was not attached to our Building and Land. The Bank took the 150,000 to reduce our loan since all the properties were part of the Loan. They allowed 29,000 of the 150,000 to remain in an escrow account that we could use for needed repairs. We would have to take an invoice for the work to the Bank and they would deposit that amount (example 5,000 of the 29,000) in our checking account to pay the invoice. Since the escrow account in not on our Books I'm not sure how we will show the transfer to our checking account from the Bank. We cannot use the escrow for anything except repairs or if we decide we can apply to the balance of our Loan. How would I show the funds the Bank deposits in our checking account and should we have shown the escrow on our Books. Thanks again

Since you do not have the funds in your checking, nor do you have any other access to the funds other than when bringing an invoice to be paid to the bank. I would just create a separate income account for this item, and whenever the money is transferred to the checking, you create the transaction to show the income in that new account, and the funds in checking.

This income account would not be budgeted on, and would only be used for this type of income.

[FBCro]

So I have now set up an income account called ESCROW. If I understand it, when the bank deposits funds in our checking account for us to pay for repairs, I would debit checking and credit Escrow. When we pay for the repairs I would credit checking and debit Building Repairs? I hope I have that right. I'm very new to accounting. Does expenses and Income accounts automatically zero out at year end. Will this Escrow account zero out at year-end. Thanks for your help