Generally, CIRAs comply with that requirement by reporting the funds for
future major repairs and replacements in a separate replacement fund.
(See discussion beginning in paragraph 400.3.)
If the CIRA prepares its financial statements using a nonfund approach,
however, the authors recommend disclosing funds designated by the unit
owners for specific purposes, for example, by using a descriptive
caption such as “Cash for future repairs and replacements.” In addition,
the authors believe such amounts should be reported as a separate
classification of members' equity on the balance sheet (or disclosed in
the notes) such as follows:
Designated by unit owners for future majo rrepairs and replacements $ 83,000
- Designated funds are similar to restricted funds, but since they are not
- legally restricted, the authors believe that the term “restricted”
- should not be used in conjunction with them.