Question

Do i add an already depreciated asset on a balance sheet

Forum|Forum|7 years ago
June 4, 2019
1 reply
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I created a multi-member LLC with my friend mid 2017... we are now sharing her home office. We both were self-proprietors and are using our already depreciated computers (which were claimed years ago on our own individual schedule c's)

We are trying to create a balance sheet - but as far as adding the total assets of the company, and since the computers are several years old and already depreciated - do we need to add their value?

ALSO: we have no liabilities. We owe no debts. How do we deal with that on a balance sheet?

TurboTax Business Windows

Rick19744

Employee

Yes you should include all assets contributed to the LLC on your balance sheet and books and records.

There are several issues and reasons why you need to do this:

Even if you dispose of the asset at some point, since the assets were contributed in a "step into the shoes" transaction (no gain or loss recognized), the LLC steps into any depreciation recapture upon disposition. So you should enter the cost and all previous depreciation taken which should net to zero. This, however, will provide the details necessary for any depreciation recapture.
Technically when the assets were contributed there was a FMV assigned to them to even up the equity component of the LLC deal. If there was any built-in gain in the assets upon contribution (FMV exceeds adjusted basis), this precontribution gain must be allocated to the contributing member using any reasonable method. This area is complicated and beyond the scope of this forum.
Not sure what you need to understand for your last question. If you have no debt or liabilities, then none get recorded on the balance sheet.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.