Recording a Verbal Transaction
Can you record a verbal transaction ie. gift of equipment where there is no written documentation, no appraisal so that it will appear on the asset listing?
These books are then to be AUDITED annually.
As you did not say you were an NFP, I assume this was not a charitable donation.
It is my understanding that all tax deductible expenses require support documentation.
At the very least, I would want a "gift letter" proving transfer of ownership.
I would expect the letter to include the pertinent information describing the equipment with a phrase similar to ICBC's gift letter ... "The above described vehicle (you would substitute equipment) is being given to (insert the business's name or the individual's name) as a gift. No money or other consideration was exchanged".
The letter would also include the name of the "giver", their address, phone number and signature. It should be dated as well.
After I had that, I would then need to do research ... I suggest you call CRA ... to determine how you bring the asset onto the books. I tend to leave these types of decisions to accountants. If you have an accountant, I am sure he/she would be happy to help you with your entry.
I am guessing that an appraisal would need to be done to establish the FMV ... similar to CRA's NFP guidelines on establishing FMV ... Reference Number CSP-F07.
I am also guessing the equipment would be recorded as an owner's contribution if it is a sole proprietor or as a shareholder loan if it is a corporation ... but I don't know.
If / when I find information on how to record this, I will post back here. I suggest you speak with your accountant regarding the recording of this transaction.
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