Balance sheet query - Apartment Complex

lodger222

Hello,

I am way out of my comfort zone with this query , so please be patient if not all info given.
I am trying to understand a blalance sheet for a community of owners of an apartment complex.

My query relates to the PROVISIONS in the example below:

TOTAL ASSETS: 58.000

LIABILITIES:
Creditors:
supplier 1 ........ 340
supplier 2......... 500
TOTAL DEBTS ......................840

Provisions: 1000
TOTAL PROVISIONS _- 1000

TOTAL.....................................................................58,160


(58000 - 840 +1000 = 58,160)

The provision refers to an unpaid debt from a previous administration and will be cleared by the community with a final payment next year.
My query is can someone tell me if it is correct to add the provision to the total assets . It would make sense to me to treat it like a creditor.


hope all that makes sense,

Thanks

Rory1

no, cant follow.

Alan Shore

Is the money owed to the company or owed by the company?

Provisions are usually liabilities.

collegeme

If the conmunity that own the assets stated will pay the 1000 in the future ie. Bext year then it should be a liability.
Is the liability relating to this debt already included in creditors and possibly the commybity will get the 1000 back from somewhere else?

lodger222

Thank you for your replies,

The money is owed by the community to someone in return for providing a service.
This service was supplied during a time when the community was run by a different administrator.
The liability/ provision is not included in the creditors .

The previous administrator did not pay this bill.When it was discovered that it was not paid, the present administrator in agreement with the community arranged with the person for it to be paid over three years.

This payment referred to as a provision for next year will be the final payment. In the accounts for the previous year , the provision was treated the same way as the example below.


My query arises from the fact that my calculation for the bank balance at end of year is different to that shown in the accounts. (When I add the surplus from this year to the bank balance as shown for the previous year.)

The accounts do not give an amount for the actual money collected.
They are not audited


FEES ISSUED + OTHER INCOME
less
CURRENT YEAR DEBTORS (community fees) + TOTAL EXPENSES
....
It was at this point that I noticed that the provisions were not treated in the same way as a supplier that is owed money.

Assets in Hand
Bank balance 58000
Debtors
Debtor1 500
Debtor2 250 750

CURRENT ASSETS 58750

LIABILITIES
Creditors:
Supplier 1 340
Suppler 2 500 -840

Provisions
A n Other +1000

TOTAL LIABILITIES: -840 +1000 = 160


TOTAL ASSETS 58910

My understanding from above would be that the community is owed the 1000 from "a n other" . But this is not the case, the community owes the money to "a n other"

Thanks for your attention.

Alan Shore

I would agree. The way it is presented is as an asset which means that it is an amount to be received not payable.

collegeme

Has an accountant prepared the accounts? If so, just ask what the provision asset is?