Purchase of Investment Property

[Divakar Ramachandran]

On Wednesday 26 September 2012 08:19 AM, Maf. King wrote:
> On Tue 25 September 12 19:54:13 oneworld wrote:
>> I have spent 1 whole day searching on the internet, but haven't been able to
>> find an answer. So can some one please help me with this. That will be very
>> much appreciated.
>>
>> I am purchasing an investment property. I have paid .25% holding deposit
>> from my own money. How do I record this transaction (journal entries) ?  The
>> questions that came to my mind are:
>>
>> (i) Is the property an asset, considering that I have not got possession of
>> the property yet ?
> Hi,
>
> I would record the deposit as an asset.  Assuming that the purchase goes 
> through ok, and you don't loose the deposit, then it will become the asset 
> price.  If it does fall through, then move it to an expense account at that 
> time.  (IANAA, nor do I have any idea about Ozzie tax laws etc...)


Since you are not in possession of the asset, I would record it under
Loans and Advances and then shift it to assets when the deal is complete.

Divakar

>
>> (ii) I have already paid the deposit but the loan transactions are yet to
>> occur. So can I do a split transaction containing home loan transactions
>> which will be occurring on settlement (in a few weeks time) ?
>>
>>
> GC can't have a split txn with 2 dates (which is  what I think you are asking)  
> I would have 2 txns, one for the deposit then one for the mortgage when it 
> comes throngh.  You can create both transactions now and give one a future 
> date (settlement date)
>
> HTH,
> Maf.
>
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