6

I keep a spreadsheet with my personal financial statements (balance sheet, income statement, cash flow) that generally follows the corporate approach. I omit considerations of depreciation, etc. There's one nit picky detail that doesn't sit well with this approach. I took money out of my RRSP under the LLP to fund my graduate studies. My balance sheet at the time then had a corresponding lower amount for the RRSP account, and the money was spent. However, it's still somewhat of a liability in that it needs to be paid back in a given amount of time.

The question is, how would I record that on my balance sheet? What I've done so far is included a liability LLP withdrawal with the outstanding amount as well as a corresponding fake asset Education from LLP withdrawal with the same amount such that the two together cancel out and don't affect the rest of the sheet.

I just figured on this late night I'd post this question, but know that it is certainly not of utmost importance.

Improve this question

2 Answers 2

Reset to default
4

You should include your RRSP on the balance sheet (in a way that makes it clear that you can't access the money easily), and include the "fake" asset as part of that. As a debt owed to it that it can reasonably expect to be repaid, it does indeed form an asset of the RRSP so it's not realy fake at all.

Improve this answer
1
  • I like this method. Given that I do intend to pay the money back, it's basically a real asset Money borrowed from RRSP.
    – fideli
    Oct 4, 2010 at 1:01
3

The resolution of this debt is up to you. Do you intend to pay the financial entity back?

If you intend to repay, one way is to treat yourself as an "employee" and the financial entity then lends this employee the money. The debt becomes an asset for the financial entity and a liability for the employee.

If you don't, then the education does become an asset (like buying a new piece of software or PC) and would need to be depreciated over time.

If you're using this to calculate your tax liability you may find that there are local tax laws that will advise on the appropriate (and statutary) treatment in order to qualify for the tax benefit.

Improve this answer

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .