USA Starting a set of books

[nthomthom]

Hello Everyone.

I am trying to the start the books of a company which has existed for years, however; there are no sets of good books for that company and has never been. I am wanting to start the books by entering in the assets of the business, but it seems difficult. For instance, the Land the business owns was originally purchased for 85k many years ago, but has since been refinanced and lets say now 100k is owed currently. Now I understand the the book value of the land should be 85k but since now 100k is owed as a liability to the bank I would need to account for the money to balance the books out. I do not know exactly where the difference in that money has gone too... perhaps liabilities owed years ago that are now paid in full. Would it be okay to start the books at the owed value of the property. Asset 100k, Bank Liability 100k.

I need help in understanding how to start an accurate set of new books as far as assets go. As far as equipment everything has been fully depreciated, so that's easy.

 

[Samir]

I've run into this situation before as well.

The best advice I can give is to get as many transcripts or copies of past financial data--tax returns, financials (even draft ones), anything. Then see what you can piece together. Then fill in the gaps with logical guesses.

Like in your example, the additional 15k had to be used for something. But if it wasn't, it was just additional equity in the business, which would make your balance sheet still correct. If it was used for expenses in the past, it would only have affect pnls of the past, and it would be more equity than there really is, but that's where you have to do your digging to find the facts.

Good luck. Clean up accounting is never fun.

 

[DZACKERY]

To the OP, how did it pan out? I agree with the previous poster in that Clean Up Accounting is a task. But so is conversion. Its a task but can kind of be a fun challenge. Hope you didnt have too many sleepless nights...