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When it comes to strata finances, an expense is reported on the income statement as a cost to be expired before the end of a current fiscal-year. It indicates what revenue must be raised to expire that recurring daily, weekly, monthly, seasonal, or annual expense. This would be electrical bills, landscaping bills, management fees etc.

In business, this would be recorded as the costs of goods, advertising, salaries, interest, rent etc. necessary to sell products and services. Where this gets confusing, is when we consider that expenses are “depreciated” according to strict Canada Revenue Agency depreciation guidelines.

For example, a business incurs an expenditure of $200,000 to purchase equipment. The expenditure occurs on a single day and the equipment is placed in service. Assuming that the equipment will be in use for ten (10) years, under the straight line method of depreciation, the cost of the equipment will be reported as a depreciation expense of $100 per day, regardless of the performance of the asset, inflation, or when it is actually taken out of use.

About Author: Jean-François

With experience gained in construction, project management, field reviews, inspections, report writing and as strata president, J.-F. has cross-industry expertise guaranteeing that you will participate in a process geared to improving the corporation's finances and to setting the condo | strata board | council's planning to stand the test-of-time.