Leases – nonrefundable security deposits

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  • #168700
    thebusyone
    Member

    I know that nonrefundable security deposits are capitalized, but should they be amortized?

    You’re help is much appreciated!

    ______________________
    BEC - 4/4/11 - 83
    REG - 1/4/12 - 82
    AUD - 2/18/12 - 77
    FAR - 5/31/12 ? 88
    Ethics - 6/13/12 - 95

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  • #676040
    mdh1005
    Participant

    Nonrefundable deposits are deferred by the lessor (unearned revenue) and capitalized (prepaid rent expense) by the lessee until the lessor considers the deposit earned.

    #676041
    PistolPete
    Member

    Are you talking FAR or REG here? Makes a difference.

    Ah, scratch that. I see you're studying FAR.

    FAR - 68, 79
    AUD - 82
    REG - 71, 71, 80
    BEC - 76

    CMA
    Part 1: October 2013
    Part 2: January 2014

    #676042
    happyprince
    Participant

    I have the same question. The textbook says “Nonrefundable deposits are deferred by the lessor (unearned revenue) and capitalized (prepaid rent expense) by the lessee until the lessor considers the deposit earned.”

    But should the total amount be recognized as revenue at the end of the lease term, or should it be recognized in a S/L manner?

    Thanks!

    "To thine own self be true."

    BEC - 83
    FAR - 88
    AUD - 99
    REG - 89
    Passed!

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