How to account for contributions of assets
nltc
Member Posts: 6
I apologize if this has been addressed elsewhere. I'm new to accounting (academic starting up a side business) and new to wave. This might be more of an accounting question actually: what would be the best way to account for assets that a partner has contributed? Eg at the start of our business, I bought a bunch of ropes and climbing gear. This was paid for from my personal bank account. Would you put this under "Owner Investment / Drawings" or make a new item under "Property, Plant, Equipment"?
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I just noticed that under "Liabilities and Credit Cards" there's also "Due to You and Other Business Owners", which seems to be relevant. I think I am confused by the fact that multiple accounts seem to apply to the particular transaction and I am not sure how to record it. Thanks for reading!!
Hey @nltc, welcome! My understanding is that when a business partner contributes a nonmonetary asset, the transaction includes a debit to whatever asset account most closely reflects the nature of the contribution and a credit to a partner equity account. Based on what I've read, you might be best served by creating owner/partner equity accounts for each partner in your business to record contributions such as this one. I'd also recommend running this by an accountant for confirmation. Someone might be able to drop in here and vouch for the accuracy and completeness of this answer. My comment should bump up your post's visibility.