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 Displaying Apportionable Costs on the Balance Sheet

Purpose

You use this process to display correctly apportionable costs (= costs passed on to the tenant) on the balance sheet. Background information:

The apportionable service charges (operating costs, heating expenses) are posted in RE to P&L accounts. Advance payments made by the tenants are posted to balance sheet accounts (special G/L accounts).

At year close, the problem arises that the apportionable service charges relative to those costs that are later apportioned to the tenant in the service charge settlement have to be displayed on the balance sheet (receivables).

That share of the apportionable service charges that cannot be passed on to tenants at a later date due to vacancies or special contractual agreements (for instance flat rates) remains as an expense on the P&L sheet.

Process Flow

  1. Define the apportionable costs using the accrual/deferral function.

  2. Repost the apportionable service charges as a lump sum via a G/L account document posting.

  3. Starting point: Cost element 4711 with service charges of USD 1000.

    Accrual/deferral: The accrual/deferral displays USD 850 as costs to be passed on to the tenant.

    Transfer posting: The posting could have the following text:

    per balance sheet (receivables from pending operating costs settlement or unfinished products) = USD 850

    to

    P&L account (either cost element 4711 or preferably a neutral P&L account used for clearing entries = USD 850.

    If you use a cost element account for the posting, you should avoid an auxiliary account assignment from settlement units because this could create problems in the service charge settlement (you may use an allocation cost center, for instance).

  4. Reverse the transfer posting after the balance sheet key date.