Canada Long Term Debt and Balance Sheets

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When transferring a small company from sole prop/partnership to corporation, how does the long term debt get balanced out on a balance sheet? If there is a loan of $20,000 that is due in 3 years, it is listed as Long Term Debt (liability) but since the loan proceeds have already been used it can no longer be listed as a corresponding asset so how is it entered on an opening balance sheet?
 

kirby

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The nature of the debt is that it is due in 3 years. Thus the debt is long term and should be shown as long term debt on the balance sheet.
 
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Thank you, that's what I thought. But this was a RRRF govt loan (similar to the CEBA covid support), the proceeds from the loan were used in 2020/2021 to carry on the business while it was temporarily closed/reduced hours. There are no corresponding assets to this loan to balance the balance sheet since the loan went to expenses (rent/payroll/etc).
 

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The sole proprietor’s balance sheet prior to acquisition had to have been in balance. And unless there were fair market revaluations, that balanced balance sheet would be brought in whole to the new corporation. So you have to look back to see how the sole proprietorship was recorded into the new corporation.
 
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