Rents received in the P&L ??
A property management limited company derives rents from commercial clients in two scenario's :
1) lease agreement between company and clients and between company and landlord
2) lease agreement between landlord and clients
In (2) above the company is simply collecting the rents on behalf of the landlord and paying this straight across. Sometimes a surplus is retained a surplus on rents collected but essentially the company charges the clients an admin/mgt fee for this facility.
In (1) above the company charges the clients rent receivable in excess rents payable to the landlord under there own arrangement/lease agreement. An admin/mgt fee may or may not be charged in addition but fundamentally the profit is derived from the net surplus rents received.
The question therefore is how should this be displayed in the P&L ?? I am assuming that in (2) the income is not reported in the P&L as it is technically not trading income of the company, however in the event of a net surplus can this be combined with the rents received in (1) or are they required to be reported separately in the P&L ??
Note that I am NOT netting-off the rents receivable and payable derived from (1), as this I consider to be trading income and cost of sales of the company.
A little bit complex but hopefully I have made myself clear.
Any advise greatly appreciated.
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