[GNC] Accounting Question re Balance Sheet

[Jesse MacDougall]

I Paul, each of the properties are to be listed in the chart of accounts so
that your balance sheet is complete and accurate.  Right now it's cloudy.
So let's polish it up.
The tax is (Sale Price - Cost Of Asset ) * 50%, that is all CRA cares
about.  Bookkeeping works out to a difference in the cost of the asset and
sale price -50%,  The difference would go to revenue if flipping properties
was your main business but its not so, this isn't a business the revenue
would go to due/to from Owner
The Due/ To/From is that accounts where your like "ahh...the puzzle piece
goes here".

Hope this helps



On Thu, Jan 20, 2022 at 11:56 AM <paul at kroitor.ca> wrote:

> This isn't really a GnuCash question, but I thought I might ask you guys
> anyway as there's a broad variety of skills and experience here.
>
>
>
> Situation: a relative owns a house on a six acre property, plus several
> adjacent properties she's collected over the years. Under Canadian tax
> rules, the house and some of the lot it's on are tax exempt. The other
> properties are taxable for capital gains. They will be sold over the next
> years, one at a time to keep marginal rates down. There will also be
> significant sales expenses (commissions, surveyors, .) associated with each
> sale.
>
>
>
> My question is about how to structure this tax and sales costs liabilities
> in the Chart of Accounts, and thus the balance sheet.
>
>
>
> It seems to me sensible to have the properties in Assets*, and the expected
> Sales Fees / Taxes in Liabilities*. Then when a property is sold, both
> assets and liabilities are reduced by the expected values, and the
> differences between the expected and actual values are booked as Income or
> Expense (Net gain / loss on land sales?).
>
>
>
> This approach makes the Balance Sheet reasonable every year, but the Income
> Statement only shows the adjustment, not the total funds in and out due to
> the sale.
>
>
>
> I've tried some alternatives too, but not having the properties as assets
> makes the Assets side of the balance sheet look silly, whereas not having
> the expected taxes / sales costs in Liabilities means that a sale triggers
> a
> huge, unexpected expense in the Income Statement without any corresponding
> income to cover it.
>
>
>
> Am I missing some cleverer way to do this? Is there a GAAP approach for
> this?
>
>
>
> Thanks for any suggestions,
>
> Paul
>
>
>
> *I know "real" books keep only the book values of these assets and tax
> liabilities, but as this is a person rather than a company, and the reports
> need to make sense to a non-business person, we use current market values
> in
> these accounts, and annually update the expectations.
>
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