Question
Prepaid HOA fees
The HOA's groundskeeping company required a downpayment of 1/3 of the annual contract price. This was recorded as a debit to prepaid expenses and a credit to cash. Each homeowner was charged for their share of this downpayment on their first invoice of the year. How are the homeowner payments for this fee categorize since they actually are paying for a 4 month period of this particular expense? Is it considered a Prepaid Assessment liability?