Bookkeeping

How do I add a promissory note to the balance sheet

A business was purchased and according to the Asset Purchase Agreement, none of the liabilities “belong” to the new company. What they have is a promissory note of $425,000 due to third party lenders. You have to set up that new note on the books and as you make the payments (according to the payment schedule/exhibit A of the agreement), you relieve that note.

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  1. 74 Answers

    I do have a question if the liabilities were not purchased and do not “belong” to the company then typically they would note recorded at all. On a companies balance sheet, you would usually only record the liabilities that belong to the company. If the promissory note is between the prior owners and a third-party lender the debt needs to be removed from the balance sheet. However, if the new owner has agreed to facilitate the debt repayment in some manner or assumed the debt then it would be recorded on the balance sheet as a liability and paid down based on the schedule.

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