converting liabilities
Mike or Penny Novack
mpnovack at mtdata.com
Thu Sep 29 08:27:28 EDT 2016
On 9/28/2016 4:48 PM, Robert Merkal wrote:
> To Whom It May Concern:
>
> how are security deposit liabilities converted to either income or expense after tenant leaves?
>
>
> Sincerely,
> Marion Merkal
That is NOT a gnucash question. You are asking how to book these funds
if you end up keeping them and that depends on whether you are
legitimately keeping them and the reason why legitimate. For examples:
a) The tenant left damage being which cost you as much (or more) to have
fixed than the amount of the deposit. You had an expense (the repairs)
which would have been entered as an expense and now you are offsetting
all or part of that expense (if the security deposit more than covered
that, you should have returned that balance --- properly submitting
copies of your repair receipts.)
b) The tenant leaving was a violation of lease terms (notice of
quitting). This is more difficult. That you had a "loss" of income
because of time to get a new tenant in probably is not an expense. It is
going to depend on the rules of your jurisdiction whether you can keep
the deposit in this situation, consult your lawyer/accountant. Similarly
whether you should treat as income (offsetting part or all of the lost
income).
c) You are keeping these funds but not for a legitimate reason
(according to the rules of your jurisdiction). I am not able to advise.
Again, consult your accountant.
Do you see now why I say NOT a gnucash question?
Michael D Novack
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