"Ron Natalie" wrote in message
m...
Matt Barrow wrote:
t ain't
spent.
Written against a liability, rather than Earnings.
This is true. If it weren't the case no corporation would ever pay
taxes. They'd just say the money they earned was going to be spent for
widgets at some time in the future.

That's not how a pre-paid expense works.


A reserve account is NOT a pre-paid expense.

A pre-paid expense requires you to pay it to someone.

I don't recall holding any difference with that. (Are you confusing me with
"Builder"?)

AIR, you have a reserve to pay a KNOWN FUTURE expense. This is distinct from
a CAPITAL account which is set aside to buy a CAPITAL ASSET in the future.

As one put it, this is different still from a sinking fund which is, IIUC,
how depreciation is handled when a depreciable item will have to be replaced
when it's useful life is ended.

I'd call my accountant, but I don't want to pay a couple hunderd $$$ to
answer "silly" Usenet questions! :~)


--
Matt Barrow
Performace Homes, LLC.
Colorado Springs, CO