I have question. Client engage in Real estate Property in USA. he collects the deposits from the tenants Now client has purchased the property from Previous Owner where security deposit credit received from previous owner by Journal Entry Now client has also given credit of Security Deposits to Tenants. So Account get settled. Tenant ledger is also zero. but client has also created Liability Charge while applying the credit to Tenant and That liability( Security Deposits) account needs to be squared up.so how to close liability account to avoid Tax Liability?what is accounting treatment of this transaction?
27 June 2016
you have to pay the security to the tenant. in you books its credit bal. then you make payment to tenant, when tenant vacant the property. its remain as credit bal. till all settlement not done with the tenant.
28 June 2016
Tenant Level is already zero.Audit Firm has raised question why Security Accounts shows credit balance as it should be removed. Now we have to clear the Deposit Security Account then how to pass journal entry to cleat the account from balance sheet.
28 June 2016
sir without payment to tenant how can you clear this accounts, otherwise you have to take as income, due to security will be non refundable to tenant.
CAclubindia
