In community association accounting, are land and buildings generally shown as assets?

In community association accounting, are land and buildings generally shown as assets?

• A. No
• B. Yes
• C. Only if owned by the association
• D. Only if financed

Answer: (A)

Assets on the financial statements reflect resources that the association actually owns and controls. In a community association, land and buildings aren’t automatically shown as assets because ownership of those properties may lie with homeowners or another entity, not with the association itself. Only if the association holds title to the land or buildings used for the common elements would they be recorded as assets (and depreciated as appropriate). When ownership isn’t in the association’s hands, those properties don’t appear on its books. That’s why, in general, land and buildings are not shown as assets.

Assets on the financial statements reflect resources that the association actually owns and controls. In a community association, land and buildings aren’t automatically shown as assets because ownership of those properties may lie with homeowners or another entity, not with the association itself. Only if the association holds title to the land or buildings used for the common elements would they be recorded as assets (and depreciated as appropriate). When ownership isn’t in the association’s hands, those properties don’t appear on its books. That’s why, in general, land and buildings are not shown as assets.