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03 - Accounting & Taxes Accounting Help & Tax Strategies

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Old 03-28-2009, 06:22 PM
Mr. Krabs Mr. Krabs is offline
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Join Date: Sep 2008
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Default How are the owner contributed assets valued and depreciated?

In a single owner LLC when the owner contributes, personal assets, lets say a computer or furniture to his/her start-up, my understanding is that the journal entry is this:
Assets debit $VALUE
Owner contributions (equity) $VALUE

What can the $VALUE be if the equipment was bought a few years ago and there is no receipt or the owner is unsure about the price paid? Who has the burden of proof and what kind of proof is needed?

Secondly, can a business then depreciate or expense (through Section 179) that equipment using the $VALUE as the basis?

Thanks for your input
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Old 03-30-2009, 03:25 PM
Launch Launch is offline
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Join Date: Dec 2007
Location: Knoxville, TN
Posts: 13
Default I could be wrong...

I am not an accountant however my understanding would be to use the lesser of cost or market value. In this case you do not know cost. Perhaps you could use historical cost for similiar items.

Quote:
Originally Posted by Mr. Krabs View Post
In a single owner LLC when the owner contributes, personal assets, lets say a computer or furniture to his/her start-up, my understanding is that the journal entry is this:
Assets debit $VALUE
Owner contributions (equity) $VALUE

What can the $VALUE be if the equipment was bought a few years ago and there is no receipt or the owner is unsure about the price paid? Who has the burden of proof and what kind of proof is needed?

Secondly, can a business then depreciate or expense (through Section 179) that equipment using the $VALUE as the basis?

Thanks for your input
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