Treatment of rent deposits at year end

Shirl

We have rented a flat in Ireland for the duration of a current work contract. Rent has been paid in advance and we have dealt with this as a prepayment. What about the deposit which was paid initially, do we treat that as a prepayment assuming that the amount is re-imbursed in full or do we leave in last years accounts as there is no guarantee of the deposit being refunded.

Any help appreciated.

Shirl

Steve Collings

Ordinarily you would treat the deposit as a sundry debtor as the landlord will refund this, assuming no damage etc.

So:

Initial recognition of the deposit:

CR bank/cash
DR sundry debtors

When landlord refunds:

DR bank/cash
CR sundry debtors.

Regards
Steve

T.C.

I have always treated deposits held as current liabilities.

PGM

T.C. wrote: »

I have always treated deposits held as current liabilities.

Should it be a sundry creditor?

deanshepherd

It's a debtor!

PGM

deanshepherd wrote: »

It's a debtor!

Deposits held?

Monsoon

Just 'sundry debtors' would do.

It's a debtor because it's owed back to you.

It can't be a liability because it's not something you owe, you have already paid it and, unless you trash the place, you will get it back

The deposit received from a tenant will be a liability in the books of the landlord.

PGM

Monsoon wrote: »

Just 'sundry debtors' would do.

It's a debtor because it's owed back to you.

It can't be a liability because it's not something you owe, you have already paid it and, unless you trash the place, you will get it back

The deposit received from a tenant will be a liability in the books of the landlord.

This is getting confusing....

My previous reply was to TC, who was talking about deposits held.

So, if you class a deposit held by the other party as a sundry debtors, why wouldn't you class a deposit held by yourself as a sundry creditor?

T.C.

Yes, I am talking as a landlord holding a deposit for a property. The money held is a liability, as it will be repaid at the end of the tenancy, or a journal entry made from deposits held to income received if the deposit is kept for damage at the end of the tenancy. Hope that makes sense.

Monsoon

The OP asked from the point of view of the tenant. That was the point of view of my answer. Sorry for any confusion!