Canada Accounting for Savings

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John has a choice between 2 apartments. John rents apt A for $800/mo instead of Apt B which is exactly the same but costs $1000/mo. Therefore john has saved $200 in monthly rental costs.

using GAAP, recording the expense is easy:
rent expense $800
cash $800

But how can I record the $200 in savings? Yes I know this is NOT GAAP compliant. But I still want to saving to appear on my balance sheet

Does this work?
Savings Asset $200
"Savings Income" $200

Income statement
"savings income" $200
rent expense 800
ni -600

balance sheet
asset : savings $200

Paid in capital $800
retained earnings -600
eq 200


OR
Paid in capital $800
retained earning -800
"savings income" 200 (or call this account "economic savings")
eq 200

So John spent $800 of his $800 in Paid in capital and now has $0 in cash, but would still be $200 ahead (hence $200 equity) relative to renting apt B. I know this is unusual but would appreciate input.
 
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Create a separete account '' Cost Saving Account'' and by recording the 200$ you can show savings on the balance.

Debit: Rent Expense - Apt A $800
Credit: Cash $800

Debit: Cost Saving Account $200
Credit: Rent Expense - Apt B $200
 

DrStrangeLove

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John has a choice between 2 apartments. John rents apt A for $800/mo instead of Apt B which is exactly the same but costs $1000/mo. Therefore john has saved $200 in monthly rental costs.

using GAAP, recording the expense is easy:
rent expense $800
cash $800

But how can I record the $200 in savings? Yes I know this is NOT GAAP compliant. But I still want to saving to appear on my balance sheet

Does this work?
Savings Asset $200
"Savings Income" $200

Income statement
"savings income" $200
rent expense 800
ni -600

balance sheet
asset : savings $200

Paid in capital $800
retained earnings -600
eq 200


OR
Paid in capital $800
retained earning -800
"savings income" 200 (or call this account "economic savings")
eq 200

So John spent $800 of his $800 in Paid in capital and now has $0 in cash, but would still be $200 ahead (hence $200 equity) relative to renting apt B. I know this is unusual but would appreciate input.
You can't record the $200 as "savings income" because it's not income. With all due respect to Benjamin Franklin, not spending money isn't income or revenue. You haven't gotten anything you didn't already have.
 
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"Accounting for savings involves tracking inflows and outflows of money, categorizing savings by purpose (e.g., emergency fund, retirement), and regularly reconciling balances. It ensures financial goals alignment and informed decision-making. Tools like spreadsheets or budgeting apps aid in effective management."
 

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