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3/3/2014 11:45:12 PM
 
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Section 5: OPA Board Subject: COPE Golf Petition? Msg# 879467
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Exactly why I said "should have" not "would have".
Depreciation does do something else though. By including a charge in the assessment for depreciation OPA charges the current owners for OPA assets recovering the money spent acquiring the assets over the lifetime of the asssets. |
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For reference, the above message is a reply to a message where: If OPA takes 1 million and purchases a depreciable asset and then collects the depreciation expense from its members, when the asset is fully depreciated then OPA should have 1 million to purchase a replacement asset or spend on something else. There is no depreciation lock box. Doesn't exist. However, in your example OPA will never have the total of $1 million depreciation in hand. OPA will spend the money on anything it choose as the money come in or anytime along the way to fully depreciated. Again, the classic example is the $1 million pool cover. The cover was new, never existed. It had never been depreciated since there was no cover to depreciate. There was no pool cover depreciation funds in the OPA reserves. However, the board built the cover by spending money from reserves. The money in reserves was there in large part from collecting depreciation on other stuff. Depreciation of short term stuff like vehicles might make some sense for OPA; depreciating $5 million structures over 40 years is absolutely nonsensical when viewed in light of how OPA boards operate. At the end of 40 years the $5 million collected for depreciation and any associated interest, will simply not be there. Boards will have spent it all in advance on other stuff. General Accounting Practice and OPA Board Spending Practice are alternative universes. |
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OPA Board Meeting - Golf Clubhouse
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OPA Board Meeting - Golf Clubhouse
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