| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7421 | Closed | public | Multifamily | Les Sparks |
|
Can you ask Les if he has guidance on the following relating to section 232 nursing homes or at least confirm these entries. 1. Landlord receives replacement reserve monthly deposits journal entry please confirm the following entry a. Debit Replacement reserves – Credit escrow/ rental income (not a liability account to tenant) 2. Tenant pays for a repair/ replacement / renovation and receives approval for use of replacement reserve please confirm the flowing entry a. the landlord credits replacement reserves and debits a capital improvement for the landlord. (one of my clients is saying that the tenant capitalizes it and not the landlord) |
|
|
From Les Sparks: There is really no guidance on this. However, your 1st entry for the Landlord is correct, it would be a debit to Replacement Reserves and a credit to Rental Income. The second one is where there is some confusion on what should be done. You are correct in that the Landlord would credit Replacement Reserves and debit a Capital Improvement. There are times when the tenant does capitalize the improvement and not the Landlord. However, HUD believes the Landlord should capitalize the improvement. We know that in New York it is not uncommon for the tenant to capitalize the improvement based on issues going on in New York. |