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ChristyP
(Florida)
Posts:7
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| 07/28/2010 11:34 AM |
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My HOA in Flordia does not record any personal property on the balance sheet. I have looked at the AICPA guidelines, which states that personal common property should be recorded on the balance sheet. When I question the current accounting policy, I am told that these are items are expensed since they are replacement items for property acquired during the turnover with the developer. I have tried to find out authoritative litature to support their recording of these items, but I cannot find anything to support this.
I believe these items need to be recorded on the balance sheet no matter what.
Does anyone have any comment |
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MaryA1
Posts:0
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| 07/28/2010 1:39 PM |
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Christy,
If these items were not purchased by the HOA there would be no way to record them on the financial statements. Exactly what "personal property" are you talking about? |
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ChristyP
(Florida)
Posts:7
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| 07/28/2010 2:48 PM |
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| common personal property (not real estate) includes pool chairs, office equipment, desk, chairs etc. I |
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MaryA1
Posts:0
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| 07/29/2010 9:03 AM |
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Christy,
If these items were 'inherited' from the builder, meaning the HOA did not purchase them, then they would not show up as assets on the balance sheet. However, if they were purchased by the HOA it would depend upon how the purchase was treated. The HOA can purchase asset items but instead of setting them up for depreciation, they can just be recorded as an expense. So, if the HOA did purchase these items (or some of them) and they were expensed out then they would not show up on the balance sheet. |
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RogerB
(Colorado)
Posts:4647
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| 07/29/2010 10:16 AM |
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| Christy, I would not include expensed items on the Balance Sheet; and I would expense these items if not all ready done so by the Developer. |
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RogerB
(Colorado)
Posts:4647
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| 07/29/2010 10:16 AM |
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| Christy, I would not include expensed items on the Balance Sheet; and I would expense these items if not all ready done so by the Developer. |
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ChristyP
(Florida)
Posts:7
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| 07/29/2010 10:24 AM |
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| Thank you for your response. However, according to GAAP and the AICPA's guide for RICA's these items should be capitalized. Where is the guidance that states these may be expensed; I can't seem to find it anywhere. I just want to make sure we are doing it correctly; could let me know where to find this guidance? |
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MaryA1
Posts:0
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| 07/29/2010 3:41 PM |
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Christy,
Go to the IRS website and search for Section 179 property. It reads: "A qualifying taxpayer can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property."
When I worked as an accountant at a CPA firm over 20 years ago the limit was $5,000; I see that it is now $250,000!
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RogerB
(Colorado)
Posts:4647
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| 07/29/2010 3:59 PM |
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| Christy, small capitalized items are usually expensed. My guideline is: "What is the resale value?" If it is insignificant it is expensed; and the items you listed have insignificant resale value. |
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ChristyP
(Florida)
Posts:7
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| 07/29/2010 6:34 PM |
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| Thank you for your response, however I am talking GAAP, not tax. There is a difference. But again thank you for your answer. |
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ChristyP
(Florida)
Posts:7
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| 07/29/2010 6:44 PM |
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I understand materiality. I am asking this question for items that would be material to the HOA. Really, the only thing I asking for is authoritative guidance, that supports recording these material items as an expense. According to AICPA guide for CIRAs (2.11) "CIRAs should recognize common personal property, such as furnishings, recreational equipment, maintenance equipment, and work vehicles, that is used by the CIRA in operating, preserving, maintain, repairing, and replacing common property and providing other services as assets." Therefore, because I have found guidance that tells me to capitalize it, I am confused as to why these items are being expensed. I was wondering if there were some technical bulletins that would say to record it another way.
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MaryA1
Posts:0
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| 07/30/2010 7:55 AM |
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Christy,
I think you are totally confused. The IRS sets the rules and I doubt GAAP is contrary to any IRS ruling. I've given you the info you're looking for, take it or leave it! But, if you still don't believe me or the IRS ruling then I suggest you contact a board certified CPA, maybe he'll have better success in educating you. |
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ChristyP
(Florida)
Posts:7
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| 07/30/2010 8:48 AM |
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| Thank you for your kind response. |
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ChristyP
(Florida)
Posts:7
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| 07/30/2010 8:55 AM |
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If you are interested in where my information is coming from, it is from section 2.12 from the AICPA's guide for CIRAs.
Also, GAAP and the IRS do contradict each other many times; that is why many corporations have deferred taxes.
Again, I do want to thank you for your time in responding to my search for the answers. I did not mean to bother you, so please don't feel the need to respond.
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MaryA1
Posts:0
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| 07/30/2010 4:07 PM |
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Christy,
All I want to make clear is that GAAP comes from the AICPA which is not a gov't agency. The IRS is a Fed Gov agency and what they say rules. In Sec 179 they give the option to either expense out the purchase of an asset or to capitalize it -- either way is acceptable. It appears to me your HOA has preferred to expense it so they have done nothing wrong. |
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| You are not authorized to post a reply. |
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