AccountingBLOCK - Tax and Accounting Forums

I work for a non profit organization and only been on board couple of months. There is a mortgage liabililty amount that represents the mortgage on a building. Earlier this year, the organization refinanced the mortgage and I believe may have had some additional work done on the building at the same time. The organization is only paying interest at this time and will start paying principal in February. The liability account needs to be adjusted to reflect the refinancing and whatever else was done at the time.

It seems to me the entry would be to credit the mortgage liability account to bring it in agreement with the note with the bank and debit the building/fixed asset account.

Am I making this entry to simple and missing something?

Thanks

1. "It seems to me the entry would be to credit the mortgage liability account to bring
it in agreement with the note with the bank..."

Original promissory note (PN) was extinguished, via payment from new lender, to previous PN
holder. Ergo, the "mortgage" liability to PN holder no. 1 was severed upon receipt of full satisfaction from
second lender.

2. "...and debit the building/fixed asset account."

I presume the debit refers to improvements to real property. If the improvements were
included in the financing agreement the proper allocation may be governed by GAAP. If
entity disbursed current FY payment consider recording the expense in current FY. Entity
type affects depreciation and expense characterization decisions: For Profit Corporations carry
losses into subsequent years to reduce tax liability, partnerships like to distribute Tax Year K-1s
reporting losses to specified partners reducing partners tax liabilities. Your entity is a nonprofit (corp.)

Your nonprofit entity benefits from amortizing depreciation of real property? Don't laugh, I have
a client Elk Lodge (non profit corporation) that depreciates real and personal property.

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