Gross Operating Income and Collection / Damages

[Geoff Bishop]

Should expenses related to Collection and Damages (caused by a tenant on his way out of a property, above and beyond any security deposit) be subtracted from Gross Operating Income?  Or should they be added to Operating Expenses?  And why?

I'm trying to figure out a good and complete formula for Gross Operating Income, with respect to real estate.  Right now I have:

Gross Operating Income = Gross Potential Income + Other Income (Parking Fees + Garage/Shed Rental + Vending Machine Income) - Vacancy - Delinquency

And then...

Net Operating Income = Gross Operating Income - Operating Expenses

Does that all sound about right?  And if so, where should I apply Collection and Damages?

Thanks for any light anyone can shed on this!