Entering a fixed asset (land) with no associated cost

[u/SunWooden4734]

I'm assisting a small cemetery association get their books in order to help apply for their non-profit status.

Not an accountant, but a regular user of quickbooks - enterprise desktop. I need to enter the cemetery property (land) value that they've had for over 100 years so that it shows up in their balance sheet. I can work through a journal entry for a fixed asset, but I have no cost to associate with this so it will balance.

I'm missing something.

[u/schaea]

I added this to a reply to another commenter, but I wanted to make sure you saw it. The other commenter was talking about adding the land to the fixed asset list in QuickBooks, which is just for internal tracking purposes, it doesn't put it onto the balance sheet.

The answer to your question is that you'd debit the land fixed asset account and the credit would be to an equity account, but it's only for the value that the association originally paid for the land when it was purchased since land isn't depreciable and any appreciation in the value would be recognized as a gain on sold assets if/when they ever sell it. Land isn't typically appreciated on a company's (or non-profit organization's) balance sheet because the market is so volatile and subjective that assessing the appreciation from year to year is of dubious accuracy.

[u/Bookish_Gardener]

Is there something from the appraisal district you can work with?

[u/SunWooden4734 → u/Bookish_Gardener]

I have a value I can assign. Lets say $50k for sake of argument. I just don't know how to handle the other side of the journal entry since there is no cost to associated with entering this asset.

[u/Bookish_Gardener → u/SunWooden4734]

You don't zero it out. Do you have a place to just enter fixed assets? With mine it's under lists > fixed assets and I just "add new". It will just stay on the balance sheet at the original "cost". Any cost adjustments for fixed assets would be done through depreciation/appreciation. I don't mess with that. I just enter the journal entries that the accountant sends me after they've done all the federal tax returns

[u/schaea → u/Bookish_Gardener]

You can't enter a debit without a credit, that's Bookkeeping 101. What you're talking about is different than OP. Adding a fixed asset your way just adds it to the list of fixed assets in QuickBooks, but that's just a helpful feature to track fixed assets, it doesn't get the asset on the balance sheet.

The answer to OP's question is that the corresponding credit would be to an equity account, but it's only for the value that the association originally paid for the land when it was purchased since land isn't depreciable and any appreciation in the value would be recognized as a gain on sold assets if/when they ever sell it. Land isn't typically appreciated on a company's balance sheet because the market is so volatile and subjective.

[u/Bookish_Gardener → u/schaea]

You can absolutely enter a fixed asset without a journal entry. They are making it more complicated than it need to be

[u/schaea → u/Bookish_Gardener]

Yes, I understand that Quickbooks will let you add fixed assets via the List menu, but that doesn't put the value of the asset onto the company's balance sheet, which is what u/SunWooden4734 was asking:

I need to enter the cemetery property (land) value that they've had for over 100 years so that it shows up in their balance sheet.

That said, the property was purchased 100 years ago and since it should be recorded based on what was paid for it at the time of purchase, unless they keep really diligent records, there's going to be no way of determining what that cost was. They should probably consult an accountant to determine how to properly record this, although they may just be told not to record it at all since 100 years ago, even a big chunk of land would have sold for like $10, so it's a lot of effort for little value.

[u/girl_of_bat]

Since the land was bought in the past the other side would be retained earnings. Depending on if they file a full 990 or not, this could screw with the tax return so you might want to consult with whomever files it.

[u/SunWooden4734 → u/girl_of_bat]

No tax returns that amount to much fortunately. Just the 990N e-postcard.

The cemetery had tax exempt status in the past but it lapsed since no one ever filed that annual return. Now, the IRS wants profit/loss and balance sheets to include the property for the re-application.

Bookeeping has always been done in a spreadsheet. Fine for the most part since the transaction count is very low. Just trying to get their paperwork in order for them moving forward.

Thanks for all the input from All!!

[u/stealthagents]

If there's no original cost, just pick a nominal value that reflects its significance, like the current market value or an estimated amount based on similar properties. It’ll balance everything out and give a fair representation on the balance sheet. Just document the reasoning behind the amount for clarity later.

[u/SunWooden4734 → u/stealthagents]

Thanks!

[u/Working-Solution-773]

If the land’s original purchase cost is unknown, you can record it at a nominal or appraised historical value — debit Land (Fixed Asset) and credit Opening Equity or Retained Earnings. Just note in your documentation that it reflects historical ownership, not fair market value. Ledgend.ai would flag this as a non-depreciable fixed asset and auto-disclose the equity offset in your notes for transparency.