Treatment of rent deposits at year end

Shirl
Shirl Registered Posts: 4 New contributor 🐸
edited June 18 in AAT member discussion
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

Comments

  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    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.
    T.C. Registered, Tutor Posts: 1,430 Beyond epic contributor 🧙‍♂️
    I have always treated deposits held as current liabilities.
  • PGM
    PGM Registered Posts: 1,937 Beyond epic contributor 🧙‍♂️
    T.C. wrote: »
    I have always treated deposits held as current liabilities.

    Should it be a sundry creditor?
  • deanshepherd
    deanshepherd Registered Posts: 1,798 Beyond epic contributor 🧙‍♂️
    It's a debtor!
  • PGM
    PGM Registered Posts: 1,937 Beyond epic contributor 🧙‍♂️
    deanshepherd wrote: »
    It's a debtor!

    Deposits held?
  • Monsoon
    Monsoon Registered Posts: 4,020 Beyond epic contributor 🧙‍♂️
    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
    PGM Registered Posts: 1,937 Beyond epic contributor 🧙‍♂️
    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.
    T.C. Registered, Tutor Posts: 1,430 Beyond epic contributor 🧙‍♂️
    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
    Monsoon Registered Posts: 4,020 Beyond epic contributor 🧙‍♂️
    The OP asked from the point of view of the tenant. That was the point of view of my answer. Sorry for any confusion!

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