Accounting for Real Estate Replacement Reserve?

I understand that this is a reserve that is set aside for repairs / capex. In our model example, I saw the sources and uses made up as such:

Sources

  • Construction loan = $400
  • Investor equity = $600

Uses

  • Land acquisition = $200
  • Construction cost = $700
  • Replacement reserve = $100

If it is set up like this, then it seems like the replacement reserve will be an asset on the balance sheet (debit balance)?

However, based on what I am reading online, the replacement reserve should be a credit balance (see paragraph below).

(https://www.accountingtools.com/articles/what-is-…)

Thanks.

Example of the Accounting for a Reserve

For example, a business wants to reserve funds for a future building construction project, and so credits a Building Reserve fund for $5 million and debits retained earnings for the same amount. The building is then constructed at a cost of $4.9 million, which is accounted for as a debit to the fixed assets account and a credit to cash. Once the building is completed, the original reserve entry is reversed, with $5 million debited to the Building Reserve fund and $5 million credited to the retained earnings account.

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