During the company’s business operations, the properties purchased fall into the category of fixed assets accounting. If you purchase a house with a mortgage loan, how should you make accounting entries?
What are the accounting entries for purchasing a house with a mortgage loan from a bank?
The company obtains a mortgage loan from the bank to purchase a house. The accounting treatment is:
1. When purchasing a house with a mortgage loan:
Borrow: fixed assets
Loan: long-term loan
2. Monthly loan payment:
Borrow: long-term loan
Loan: bank deposit
Fixed How to understand assets?
Fixed assets refer to non-monetary assets that are held by an enterprise for the purpose of producing products, providing labor services, leasing or operating and managing, used for more than 12 months, and whose value reaches a certain standard. The obvious characteristics of fixed assets are their long service life and large unit value.
Fixed assets mainly include the following categories:
1. Houses and buildings refer to all houses and buildings whose property rights belong to the enterprise.
2. General office equipment refers to office and business equipment commonly used by enterprises.
3. Special equipment refers to equipment owned by an enterprise and used exclusively for a certain job.
4. Cultural relics and displays refer to various cultural relics and displays in cultural institutions such as museums and exhibition halls.
5. Books refer to books in professional libraries, cultural centers and business books of units.
6. Transportation equipment refers to various transportation tools used by the logistics department.
7. Mechanical equipment, mainly machine tools, power machines, tools, etc. and spare generators used by the enterprise's logistics department for its own maintenance, as well as measuring instruments, testing instruments and medical equipment in hospitals.
8. Other fixed assets refer to fixed assets not included in the above categories. The competent department may make appropriate classifications based on specific circumstances, or may appropriately subdivide the above categories and add categories.
Accounting Entries for House Purchases
1. Purchase of land and real estate for personal use, that is, held for the production of goods, provision of labor services, or operation and management.
Debit: Intangible assets - land use rights
Fixed assets - houses and buildings
Loan: bank deposits, etc.
2. Purchase Land, property held for rental income or capital appreciation, or both.
Debit: investment real estate - land use rights
Investment real estate - houses and buildings
Loan: bank deposits, etc.