How do I enter FF&E Reserves on the Operating Statement for Owners?

Replacement reserves typically do not appear on a traditional Profit and Loss (P&L) statement (Operating Statement for Owners) because they are not operational expenses but rather funds set aside for future capital expenditures. However, these can be recorded using the chart of account setup below. This process does require a monthly journal entry to be entered for the amount to appear on the financial statements. 

Setup of Replacement Reserves in Financial Statements:

1. Profit and Loss Statement - Expense Recognition: If you want to reflect the cost of setting aside funds for replacement reserves on the P&L statement, you can create an expense line item such as "FF&E Reserves Expense" in the Non-Operating Income and Expense section. This would show the amount allocated to the reserves during the reporting period.
2. Balance Sheet - Reserve Account: Replacement reserves Offset are typically recorded as a liability or equity account on the balance sheet. This account, such as "Replacement Reserves Offset," shows the total amount accumulated over time for future replacements or major repairs.

Example Presentation:

Operating Statement for Owners

Balance Sheet

Summary:

• On the P&L Statement: Include "Replacement Reserves Expense" to reflect the allocation or contribution to the reserve fund.
• On the Balance Sheet: Show the "Replacement Reserves Offset" to indicate the accumulated reserves.

The suggested setup is only to be used as an example. You can setup these accounts as you prefer should you want these in another department or section of the financial statement.