AccountingBLOCK - Tax and Accounting Forums

Subsidy

I was wondering how COBRA payments should be shown on the Financials. The way I believe it should be shown is, it should remain a Balance Sheet item and should never hit the P/L.

For instance:

1. Aetna invoice comes in; the total premium for the company is $1000
2. $100 dollars of that is the full premium for an employee’s Cobra.
3. $900 should be expensed and $100 should go into Cobra Balance sheet account.
4. Once the EE pays his 35% (Stimulus Plan) you should have a remaining $65 sitting on the
balance sheet.
5. After the quarter ends and the subsidy balance is credited, this will wipe off the remaining
amount on the balance sheet.

My company is letting these payments credit and debit themselves from an expense account, therefore having a greater fluctuation on the P/L?