Assets

Anna_BFA_84

Hi Everyone and thanks for allowing me to join the community. I am absolutely new to accounting and bookkeeping. Started with Wave I was absolutely amazed how easy it seems to handle the accounting. But now as my folder of bills and invoives gets smaller the more difficult ones to put in the system come up. Right now I am struggeling with assets. My Company started last year and we did lots of construction. We build houses to rent out for guests. So the construction costs are defientely expenses but at the end as the house is finished it results in an asset, right? How do I put the expenses and add it as an asset? I dont get it at all. Any help would appreciated.

Thanks so much
Anna

Mikeg

Anna,
Can only speak to the US. Costs associated with the creation of an asset are not expenses. If you are building a house (asset) to rent, then all cost associated with the construction are required to be capitalized (put on balance sheet). You would then recover your cost through annual depreciation expense. So materials, labor, subcontractors, engineering, etc expenses would into the cost of the created asset. If you are sharing costs between multiple houses, then you would allocate based upon some reasonable basis.
MIke G, CPA
www.mgfinancial.net