Question on Loan for purchase of building

[Scraps]

Scenario.

I own a small convenience store which I was renting the space. I just got a
business loan and bought the building. How do I expense this transaction on
my Financial Statements. i.e the interest on the loan, my monthly payments.
Is there anything regarding the building and depreciation that I should know
about regarding this purchase?

Thanks in advance for any responses.

Mike

 

[Paul A Thomas]

I own a small convenience store which I was renting the space. I just got
a business loan and bought the building. How do I expense this
transaction on my Financial Statements. i.e the interest on the loan, my
monthly payments. Is there anything regarding the building and
depreciation that I should know about regarding this purchase?

Book the building cost (full purchase price) as an asset, book the loan you
owe to a liability, and any difference between the two must have been paid
by cash, right?

Each month when you make the loan payment, part goes to reduce the loan, and
the other part (the interest) is an expense. Then, each month you should
take a % of the purchase price as depreciation.

If you don't have one, get an accountant to help you set this up.

 

[Stuart Nottingham]

Unless something's changed and gotten by me, shouldn't the cost be split
between the building and the land it sits on? Only the portion assigned to
the building would be depreciable.

Stuart Nottingham

 

[Paul A Thomas]

Unless something's changed and gotten by me, shouldn't the cost be split
between the building and the land it sits on? Only the portion assigned
to the building would be depreciable.

Yup. Thanks for catching that.