[Nami]

Hi all,

Does U.S.GAAP allow to recognize expenses for repair reserve liability (Plant turn around) ? Understand that some country allow to recognize expense to several years before there is actual turn around.

Repair reserve liability ( Dr. Maintenance expense Cr. Repair reserve liability)

Which section (ASC) under U.S.GAAP I can look for ?

Thank you.

Illinois CPA 02/15

[alloverit]

If I'm understanding correctly: NO

GAAP stipulates that repairs are expensed in the period incurred. There is certainly no way under GAAP to recognize an expense years beforehand.

Unlike bad debt expense, there would be no way to set up the reserve. The allowance for bad debts account is born from earnings that may not be actual earnings (customers don't pay). The same accounting theory could not be used for expenses.

However, expenses can and should be budgeted. So an internal, temporary holding account could in theory be set up so long as it was closed each year. But again, that is really an internal budgeting technique rather than an actual tool for financial reporting.

Interesting question. What countries allow what you described?

FAR 81

AUD 83

BEC 93

REG 84

Ross

[Author]

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