the president of the corporation receives non consistent payments every moth. currently is classified as other assets officer advances. how is this an asset ? is this right ? in our balance sheet shows as an asset. isnt this an expense.
It is an asset. It is something the company is owed by someone else. This someone else happens to be an officer. It's no different than a customer receivable or an employee advance. Your company gave money to the officer with the intent of getting it back by the return of money or the giving of a service.
If the officer doesn't pay it back - then you have compensation!
Hope this helps! If so, please mark Solved or ask more questions. Thanks.
Debbie
How long is it advised to wait for the officer to pay back before the corporation should consider it compensation?
the way the officer is paying back is by services, but i don't see how do we account for that. do i have to create an account to offset this asset.
I disagree with Debbie and this is a dividend. If a corporate office works for a corporation, then he is an employee, subject to all taxes as an employee. I would HIGHLY recommend consulting with your CPA or tax advisor regarding the handling of this situation.
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Julia
The initial post didn't provide enough information about what the payment was for -- was it an advance, repayment of a loan, a loan to him, compensation, etc. Since it is for services, then it sounds like payroll which is an expense. You need to determine what the payment is for to know how to account for it properly.
All the answers this evening were a good read. Thanks. I was researching something different and the original requestor's question is what prompted my additional question.
