Balance sheet problem when asset is depreciating

Forum|Forum|6 years ago
May 2, 2020
18 replies
98 views

Hello,

I'm having trouble balancing a balance sheet. Its a straight forward balance sheet, except for assets they have depleting assets (goodwill) and a car that is depreciating.

Because these assets get smaller each year, the balance sheet is out of wack. The liabilities (mostly paid in capital) is staying the same.

How do i deal with this?

ProSeries Professional

This topic has been closed for replies.

Accountant-Man

Level 13

Let's assume that you have one asset, 100k, that has 20k depreciation each year. At the beginning of this year you had opening balances of 100k less 20k, or 80k. Good so far?

You transfer from last year, so those numbers are in the beginning balance column. For this year, the balances should be 100k less 40k, or 60k.

1) You must enter the 100k in the ending balance column.

2) You can use the accumulated depreciation worksheet, clicking yes to have the new depreciation appear.

3) You must go to the M1 under the balance sheet to check the box that book depr equals tax depr.

How does it look now?

** I am "Elevating with Intention!"

G

Golfer2016Author

Level 5

I get all of that, but let me detail my problem.

The TP set up a new S corp a few years ago. He contributed $101,000. $1,000 was capital stock, the other $100,000 went into additional paid in capital.

He depreciates the $100,000 by taking $20,000 per year.

On the balance sheet, after the first year it shows $80,000 of assets. However, the equity shows $100,000 of additional paid in capital. It's out of balance.

Do I take out $20,000 of additional paid in capital to make it work?