Loan Advance from Reserve for replacement

ID Status Date Public/Private Industry AHACPA Contact
#15332 Closed public Multifamily Les Sparks
Customer Reply

I have a client who was advanced $50,000 from their R4R account to assist with expenses of a fire.  They are required to repay this advance either as a one time payment of $50,000 or as 36 equal monthly additional deposits to the R4R.  How should this be presented in the financial statements and the REAC submission?  My thought is to include the description in the R4R footnote disclosure. Also, how is it presented in the computation of surplus cash?  Should the entire $50,000 be a subtraction? or 12 months of the repayment as current?  This is a not for profit and any surplus cash is to be deposited in residual receipts.  There is only a HUD insured mortgage.

Les Sparks

David, show the entire release for the R4R account as an approved withdrawal. If there are payments during the same year, show that as “Other Deposits”. From a liability perspective, I would show it as a note payable – surplus cash. You can certainly put a current portion in current liabilities. Remember to not include any of this liability in the surplus cash calculation. The goal is to repay of that loan prior to having surplus cash.

 

Les Sparks

AHACPA

(801) 547-0809

 

From: AHACPA Support <support@ahacpa.org>
Sent: Thursday, March 25, 2021 12:52 PM
To: les@ahacpa.org
Subject: Loan Advance from Reserve for replacement [NEW]

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