I have a client who owns a commercial real estate property. They have a bank loan which requires them to maintain a specific balance for future tenant improvement allowances. If they spend from that account on an improvement allowance, they are then required to pay a monthly impound until the account hits the required balance. I am trying to determine the cleanest way to record the obligation. What would the offsetting account be to the restricted cash reserve asset?
USA Reserve Accounting
- Thread starter Jgrant
- Start date
DR Cash - Tenant Improvements Reserve account
CR Cash From Regular Account
Impound Reimbursement:
DR Cash - Tenant Improvements Reserve Account
CR Cash From Regular Account
At Year End a J/E (for financial statement disclosure) is made to the Equity Account to show total the reserve should be
DR: Retained Earnings
CR Reserve for Tenant Improvements Reserve
CR Cash From Regular Account
Impound Reimbursement:
DR Cash - Tenant Improvements Reserve Account
CR Cash From Regular Account
At Year End a J/E (for financial statement disclosure) is made to the Equity Account to show total the reserve should be
DR: Retained Earnings
CR Reserve for Tenant Improvements Reserve