Community Forum Portal/Portail du forum communautaire
We are trying to generate a net worth statement for the credit union and I have the feeling our land is set up incorrectly. We have the original purchase of the land under an asset sub account called land but then when we started putting in the fair market value of our assets for the net worth we set up a class 1 list of land so we could enter a fair market value on the net worth statement. Now the land shows up twice on the net worth statement. How should my chart of accounts be set up and where should I be entering land?
Good morning mme!
The way the setup of land works for net worth is two fold. First, you enter the purchase of the land, at cost, into the chart of accounts. This will stay there until the land is sold, since the chart of accounts must always be at cost.
When you want to produce a net worth statement, you need to go to Management > Fair Market Value. From there, you can set the fair market value of your land in the time period you will be generating your statement for. This allows you to produce your net worth statement at fair market value for your assets and capital assets, and leaves the balance sheet alone at cost so that it meets the requirements of GAAP.
You will want to reverse anything you have entered into that Class 1 account - those adjustments should not be there. Class 1 is specifically for buildings with certain criteria. That will allow land to appear only once, and if the fair market value is updated, it should appear at that value.
I hope this helps!