A little puzzle here, looking for suggestions or at least something that will jog my brain towards further solutions.
I share a property 50:50 with a family member. In double entry accounting this could be:
Debit: Property asset account 100,000
Credit: Equity shareholders 50,000 + 50,000
Suppose we agree to pay a nominal rate to use the property privately. An alternative to actually transferring money could be to agree to let the equity split vary according to our respective use of the property, for example:
Private use of property for nominal rent of 2,000
Debit: equity shareholder account (the tenant) 2,000
Credit: retained earnings 2,000
Debit: retained earnings 2,000
Credit: equity shareholder accounts 1,000 each
Balance on equity shareholder accounts is then 51,000 and 49,000 respectively.
1. is the working on the above example correct?
2. are there alternative ways to account for this? without any actual money transferring hands. Apart from a private loan agreement.
For my info: related question: http://www.experts-exchange.com/Other/Consulting/Q_28600158.html