Guidebook 7510.1

Appendix A:

Property Ledger

Appendix A: Property Ledger

Subsidiary Accounts to Account 1400.4:

Land, Structures, and Equipment

The Property Ledger contains the fixed asset accounts established

and maintained as a subsidiary to the General Ledger Account

1400.4, Land, Structures, and Equipment. The accounts reflect the

cost of property acquired and held for the projects under an Annual

Contributions Contract (ACC) with HUD. The HUD accounting system

does not provide for the depreciation of fixed assets for projects

under an ACC.

Table 1 (p. A-3) is a chart identifying the Property Ledger

subsidiary accounts (1405 to 1475) and the corresponding

development/modernization cost subsidiary account. The Property

Ledger account descriptions are the same as the descriptions for

the subsidiary accounts to Account 1400.2. (Note: establishment of

the Property Ledger Account 1400.4 has no effect on General Ledger

Account 1400.2).

The capitalized amount of development/modernization cost includes

not only the direct cost of the fixed asset itself, but also any

ancillary costs (e.g., administrative costs, site improvements,

legal fees, interest costs, etc.) associated with the development

or modernization program as approved by HUD.

Development

The Property Ledger is established as a subsidiary ledger to

Account 1400.4, Land, Structures, and Equipment in the amount of

the development cost charged to Account 1400.2. The initial entry

to Account 1400.4 to capitals the development cost of a project

(debit Account 1400.4, credit Account 1400.3) may be made at the

end of the initial operating period (EIOP). Account 1400.4 and the

Property Ledger are then updated monthly for any additional

development costs recorded in Account 1400.2 between EIOP and the

issuance of the Actual Development Cost Certificate (ADCC).

Modernization

All modernization costs incurred by the HA in connection with

modernization for a Comprehensive Improvement Assistance Program

(ClAP), or a Comprehensive Grant Program (CGP) are capitalized in

Account 1400.4 (debit Account 1400.4, credit Account 1400.3), and

added to the Property Ledger. The capitalized amount is equal to

the amount charged in the modernization cost ledger (subsidiary

ledger for Account 1400.2) and approved by HUD on the actual

modernization cost certificate.

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Appendix A: Property Ledger

Operations

Fixed asset transactions that are paid from operating funds are

recorded in Account 1400.4 and the appropriate Property Ledger

subsidiary accounts. The transactions require entries to:

o Capitalize the cost in General Ledger Account 1400.4

and the applicable subsidiary account in the Property

Ledger.

o Record the cost in the 7500 series of memorandum

accounts to accumulate the fixed asset operating

expenditures for the fiscal year.

The capitalization criteria of the HA determines if property

additions or acquisitions represent a capital expenditure. The

description of Account 7540 provides a definition of property

betterments and additions. The most frequent capital expenditures

from operating funds are for nonexpendable equipment purchases

(Accounts 1465 and 1475).

Capitalized property sold or otherwise disposed of after the date

of full availability (DOFA) is credited to Account 1400.4 in the

amount of the original cost (or an estimate or allocation of the

cost). The gain or loss arising from the disposition of

capitalized property is recorded in Account 6110 or Account 6120,

as appropriate.

See pages A-4 through A-7 for sample accounting entries for fixed

asset transactions during the operations period.

For additional procedural information which may be

adapted for use by HAs, see \"A Guide to Financial

Management for RMCs, Part Two: Chapter 4, Accounting

for Maintenance Materials and Supplies and Expendable

Equipment; Chapter 5, Accounting for Fixed Assets,\"

November, 1991 (HUD User-1322-PDR).

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Accounting Guide

Appendix A: Property Ledger

Table 1

Property Ledger: Account 1400.4

Land, Structures, and Equipment

Subsidiary Subsidiary

1400.2 Source

Accounts Property Ledger Accounts for

Initial

to 1400.4 Account Title Entry

Amount

1405 Indirect Development Costs 1408; 1410;.1-

1410.19;

1415; 1420.1-

1420.7

1425; 1430.1-

1430.19

1495

1440 Site Acquisition 1440.1-1440.20

1440.3 Account 1440.3 shall be used to

credit the actual or allocated cost

of land sold after DOFA

1450 Site Improvement 1450-1450.3

1460 Dwelling Structures 1460-1460.3

1465\* Dwelling Equipment 1465.1-1465.3

1465.1 Non-expendable dwelling equipment

consists primarily of ranges and

refrigerators in units.

1470 Non-Dwelling Structures 1470-1470.3

1475:\* Non-Dwelling Equipment: 1475.1-1475.10

1475.1 Office Equipment

1475.2 Maintenance Equipment

1475.3 Community Space Equipment

1475.4 Computer Equipment

1475.7 Automotive Equipment

1480/1482 Distribute to applicable account

\* Equipment records must be maintained for nonexpendable

equipment meeting the HA criteria for capitalization. The

equipment records must include the asset cost (or estimated

value) and sufficient description for identification of the

equipment for purposes of the annual physical inventory.

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Appendix A: Property Ledger

Accounting Procedures for Fixed Asset Transactions

A. From Operating Receipts and Expenditures

Fixed asset transactions that occur during the operations period,

and that involve operating funds, are recorded both in Account

1400.4, Land, Structures, and Equipment (and the appropriate

subsidiary account) and in the 7500 series of memorandum

accounts.

o Entries to Account 1400.4 for acquisition or

disposition of property are based on the cost of the

property.

o The gain or loss on disposition of a fixed asset is the

difference between the cost of the property and any

cash received (or trade-in allowance given). The gain

or loss on disposition is recorded in either Account

6110 (for real property) or Account 6120 (for

nonexpendable equipment).

o Entries to the 7500 series of memorandum accounts are

based on the cash expenditure (or receipts) for the

transaction.

The following examples are typical transactions for property

acquisition and disposition from operating funds.

A-1. Acquisition of New Asset

eg: Non-expendable Equipment: cost, \$9,000

Debit: Account 1400.4/1475.s - Land, \$9,000

Structures, and Equipment and

Subsidiary (a)

Credit: Account 1111.1, Cash- General \$9,000

Fund(b)

\- and -

Debit: Account 7540 - Property \$9,000

Betterments and Additions(b)

Credit: Account 7590 - Operating \$9,000

Expenditures for Property, Contra

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Appendix A: Property Ledger

Entry to Record

\(a\) Cost of new equipment (\$9,000)

\(b\) Cash payment for new equipment (\$9,000)

A-2. Disposition Without Replacement

eg: Non-expendable Equipment: cost, \$5,000; sales

proceeds, \$300

Debit: Account 1111.1, Cash - General \$ 300

Fund (a)

Debit: Account 6120 - Gain/Loss from 4,700

Disposition (b)

Credit: Account 1400.4/1475.s - Land, \$5,000

Structures, and Equipment and

Subsidiary (c)

\- and -

Debit: Account 7590 - Operating \$ 300

Expenditures for Property, Contra

Credit: Account 7530 - Operating \$ 300

Receipts for Property (a)

Entry to Record

\(a\) Sale proceeds from disposition (\$300)

\(b\) Difference between the cost of the old equipment and

the sales proceeds from disposition (\$5,000 minus \$300)

\(c\) Original cost of old equipment (\$5,000)

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Appendix A: Property Ledger

A-3. Disposition With Replacement

eg: Non-expendable Equipment: new equipment, cost, \$9,000;

old equipment cost, \$5,000; trade-in allowance on old

equipment, \$300

Debit: Account 1400.4/1475.s - Land, \$9,000

Structures, and Equipment and

Subsidiary (a)

Debit: Account 6120 - Gain/Loss from \$4,700

Disposition (b)

Credit: Account 1400.4/1475.s - Land, \$5,000

Structures, and Equipment and

Subsidiary (c)

Credit: Account 1111.1, Cash - General \$8,700

Fund(d)

\- and -

Debit: Account 7520 - Replacement of \$8,700

Nonexpendable Equipment (d)

Credit: Account 7590 - Operating \$8,700

Expenditures for Property, Contra

Entry to Record

\(a\) Acquisition cost of new equipment (\$9,000)

\(b\) Difference between the cost of the old equipment and

the trade-in allowance (\$5,000 minus \$300)

\(c\) Cost of the old equipment traded in on new equipment

(\$5,000)

\(d\) Actual cash payment for new equipment: cost less trade-

in allowance (\$9,000 minus \$300)

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Accounting Guide

Appendix A: Property Ledger

A-4. Casualty Loss Affecting Book Value of Project

eg: A dwelling structure is destroyed by fire. Estimated

cost, \$125,000 Insurance settlement, \$121,000; (the

structure will not be replaced)

Debit: 1111.1, Cash - General Fund (a)

\$121,000

Debit: 6110 - Gain/Loss from \$

4,000

Disposition (b)

Credit: 1400.4/1460 - Dwelling(c)

\$125,000

\- and -

Debit: 7590, Contra

\$121,000

Credit: 7580 - Proceeds from

\$121,000

Disposition-Reserved (d)

Entry to Record

\(a\) Insurance proceeds (\$ 121,000)

\(b\) Difference between cost of structure and insurance

proceeds (\$125,000 minus \$121,000)

\(c\) Estimated cost of structure (\$ 125,000)

\(d\) Proceeds reserved pending application in accordance with

HUD approval (\$121,000)

B. For Donated Assets

When property which meets the HA capitalization criteria is donated

to the HA during the operations period, the reasonable value of

such property is recorded in the fixed asset account.

Debit: 1400.4/subsidiary - Land, Structures, & Equipment

Credit: 2850 - Surplus, Cumulative Donations

Cash donations which are used in the operation of the HA are

recorded in Account 3690, not in Account 2850.

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Appendix A: Property Ledger

C. For Transfer of Dwelling Units to Homebuyers

When the HA transfers title of dwelling units to homebuyers, an

entry is made to credit the fixed asset account with the

estimated cost of the unit. No entry is required to the Property

Ledger subsidiary accounts.

Debit: 1400.4 - Land, Structures, and Equipment

Credit: 2890 - Surplus, Cost of Dwellings Conveyed to

Homebuyers

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