Self-Study
10
Overview
Accounting
There are no prerequisites.

Course Description

There are many kinds of real estate transactions, each of which must be accounted for in its own unique way. Real Estate Accounting describes how to properly account for various types of transactions, such as retail land sales, real estate sales, property exchanges, and the sale of time-share intervals. It also illustrates related financial statement presentations and accompanying disclosures. In addition, this course describes the accounting related to the rental of property and investments in real estate ventures.

You'll find answers to many questions regarding Real Estate Accounting:

  • Which preacquisition costs can I capitalize?
  • How do I capitalize the cost of interest into a real estate project?
  • Do I recognize goodwill when buying an income-producing property?
  • What are the criteria for using the different income recognition methods?
  • How do I account for an exchange of property?
  • How do I account for the sale of a time-share interval?
  • What types of leases can be offered to a prospective tenant?
  • How do I account for asset retirement obligations?
  • How does an investor account for an interest in a real estate venture?
  • And many more!


Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Accounting
May 24, 2017
There are no prerequisites.
SS1153421
200
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Recognize the underlying principles of accounting, the nature of the accounting cycle, and the types of organizations that can be used to engage in real estate transactions.

Chapter 2

  • Note the types of project costs, as well as when and how to capitalize interest on a real estate project.

Chapter 3

  • Identify the steps involved in accounting for an acquired income-producing property, as well as the process flow for goodwill impairment testing. Also, recognize the alternative treatment of amortizing goodwill, and the circumstances under which it can be used.

Chapter 4

  • Note the criteria for determining a buyer's commitment to pay, and the types of income recognition methods that can be used.

Chapter 5

  • Recognize the nature of a retail land sale, the manner in which income recognition methods can be applied to these sales, and the calculation of the net sales figure associated with a retail land sale.

Chapter 6

  • Identify the options available for valuing exchanged property, and the use of boot in calculating profits.

Chapter 7

  • Identify the characteristics of time-share arrangements, as well as the calculation of sale prices and the criteria for recognizing a time-share sale.

Chapter 8

  • Recognize the nature of contingent rent agreements, lease incentives, and leasehold improvements, and the accounting for them.

Chapter 9

  • Note the criteria for recognizing asset retirement obligations, as well as the rules for calculating these obligations. Also, identify the criteria for recognizing environmental obligations.

Chapter 10

  • Identify the calculation requirements for the equity method of accounting, as well as the origin of the costs used in the cost method, and the treatment of investor loans to a venture.

Chapter 11

  • Recognize the types of entities that can be classified as common interest realty associations, as well as the accounting for special assessments.


Table of Contents

Chapter 1 – Introduction to Accounting

Learning Objectives

Introduction

Financial Accounting Basics

Accounting Frameworks

The Accounting Cycle

Accounting Transactions

Types of Transaction Cycles

Source Documents

Double Entry Accounting

The Accounting Equation

Journal Entries

The Ledger Concept

Posting to the General Ledger

General Ledger Overview

The Accruals Concept

The Realization Concept

Accrual Basis of Accounting

Cash Basis of Accounting

Real Estate Entities

Sole Proprietorship

Partnership

Corporation

C Corporation

S Corporation

Limited Liability Company

The Following Chapters

Summary

Chapter 1 – Review Questions

Chapter 2 – Initial Real Estate Costs

Learning Objectives

Introduction

Relevant Accounting Sources

Capitalization

Real Estate Preacquisition Costs

Treatment of Preacquisition Costs

Operating and Non-Operating Classifications

Internally-Generated Preacquisition Costs

Real Estate Project Costs

Real Estate Taxes and Property Insurance

Real Estate Interest Costs

Assets for Which Interest Must be Capitalized

Assets for Which Interest is not Capitalized

The Interest Capitalization Period

The Capitalization Rate

Calculating Interest Capitalization

Impact of Financing on Property Purchase Price

Costs Allocated to Real Estate Projects

Real Estate Donated to the Government

Changes in Estimates

Changes in Expected Use

Project Abandonment

Real Estate Selling Costs

Capitalized Selling Costs

Capitalized Advertising Costs

Selling Costs Charged to Expense

Real Estate Rental Costs

Real Estate Incidental Operations

Initial Rental Operations

Real Estate Amenities

Startup Costs

Presentation and Disclosure Topics

Classifications within the Statement of Cash Flows

Public Company Disclosures

Capitalized Interest Disclosures

Imputed Interest Disclosures

Summary

Chapter 2 – Review Questions

Chapter 3 – Purchase of Income-Producing Property

Learning Objectives

Introduction

Relevant Accounting Sources

Overview of Business Combinations

Identifiable Assets and Liabilities, and Noncontrolling Interests

Goodwill or Gain from Bargain Purchase

Goodwill Calculation

Bargain Purchase

Purchase of Assets

Amortization of Intangibles

Goodwill

Goodwill Amortization

Presentation and Disclosure Topics

General Disclosures

Identifiable Assets and Liabilities, and any Noncontrolling Interest

Goodwill or Gain from Bargain Purchase

Goodwill Disclosures

Summary

Chapter 3 – Review Questions

Chapter 4 – Real Estate Sales

Learning Objectives

Introduction

Relevant Accounting Sources

Replacement of the Accounting Standards

Step One: Link Contract to Customer

Step Two: Note Performance Obligations

Step Three: Determine Prices

Step Four: Allocate Prices to Obligations

Step Five: Recognize Revenue

What Constitutes a Real Estate Sale?

Full Accrual Method Revenue Recognition

Buyer’s Commitment to Pay

Profit Recognition Not Using the Full Accrual Method

Sale is Not Completed

Buyer’s Initial Investment Does Not Qualify

Buyer’s Continuing Investment Does Not Qualify

Receivable is Subject to Future Subordination

Continuing Seller Involvement

Decision Tree for Use of Methods

Revenue and Profit Recognition Methods

Installment Method

Cost Recovery Method

Reduced-Profit Method

Percentage-of-Completion Method

Deposit Method

Financing Method

Leasing Method

Profit-Sharing Method

Real Estate Project Recoverability

Derecognition of Real Estate Project Costs

Real Estate Held-for-Sale

Presentation and Disclosure Topics

Summary

Chapter 4 – Review Questions

Chapter 5 – Retail Land Sales

Learning Objectives

Introduction

Relevant Accounting Sources

Retail Land

Full Accrual Method

Percentage-of-Completion Method

Installment Method

Deposit Method

Presentation and Disclosure Topics

Summary

Chapter 5 – Review Questions

Chapter 6 – Nonmonetary Exchanges

Learning Objectives

Introduction

Relevant Accounting Sources

Overview of Nonmonetary Transactions

Exchanges Involving Monetary Consideration

Exchanges of a Nonfinancial Asset for a Noncontrolling Ownership Interest

Spin-off Transactions

Like-Kind Exchanges

Presentation and Disclosure Topics

Summary

Chapter 6 – Review Questions

Chapter 7 – Time-Sharing Activities

Learning Objectives

Introduction

Relevant Accounting Sources

Time-Share Characteristics

Criteria for Revenue Recognition

Buyer’s Initial Investment

Impact of Unused Sampler Programs and Mini-Vacations

Buyer’s Continuing Investment

Sales Value

Revenue Recognition Methods

Full Accrual Method

Percentage-of-Completion Method

Deposit Method

Cost Recognition

Additional Time-Share Transactions

Additional Products and Services

Treatment of Selling Costs

Effects of Below-Market Financing

Estimating Uncollectible Receivables

Debt Restructurings

Deferral of Rental Costs

Upgrade Transactions

Reload Transactions

Payments by Seller to Support Operations

Management Services

Operation of Affinity Programs

Holding Period

Impairment

Accounting Changes and Error Corrections

Special-Purpose Entities

Assumptions and Sales of Debt

Leases

Presentation and Disclosure Topics

Summary

Chapter 7 – Review Questions

Chapter 8 – Rent Topics

Learning Objectives

Introduction

Relevant Accounting Sources

Types of Leases

Contingent Rent

Lease Incentives

Leasehold Improvements

Prepaid Rent

Straight-Line Rent

Operating Expense Issues

Sub-Leases

Presentation and Disclosure Topics

Summary

Chapter 8 – Review Questions

Chapter 9 – Asset Retirement and Environmental Obligations

Learning Objectives

Introduction

Relevant Accounting Sources

Overview of Asset Retirement Obligations

The Initial Measurement of an Asset Retirement Obligation

Subsequent Measurement of an Asset Retirement Obligation

Settlement of an Asset Retirement Obligation

Overview of Environmental Obligations

Measurement of Environmental Obligations

Recoveries Related to Environmental Obligations

Presentation and Disclosure Topics

Asset Retirement Obligations

Environmental Obligations

Summary

Chapter 9 – Review Questions

Chapter 10 – Real Estate Ventures

Learning Objectives

Introduction

Relevant Accounting Sources

Accounting for an Interest in a Real Estate Venture

Consolidations

Consolidation Examples

Recognition of Noncontrolling Interest

Sale of Shares by Subsidiary

Share of Accumulated Other Comprehensive Income

Full Consolidation Example

Equity Method of Accounting

Cost Method

Changing Methods

Transactions with a Real Estate Venture

Contributions

Loans

Purchase of Real Estate from a Venture

Sale of an Investment in a Real Estate Venture

Real Estate Syndication

Syndication Activities

Syndicator Risks and Rewards

Income Recognition by Syndicators

Acquisition, Development, and Construction Arrangements

Participating Mortgage Loans

Real Estate Investment Trusts

Presentation and Disclosure Topics

Summary

Chapter 10 – Review Questions

Chapter 11 – Housing Associations

Learning Objectives

Introduction

Common Interest Realty Associations

Issues Specific to Cooperative Housing Associations

Presentation and Disclosure Topics

Common Interest Realty Association Presentation Requirements

Common Interest Realty Association Disclosures

Cooperative Housing Association Presentation Requirements

Cooperative Housing Corporation Disclosures

Summary

Chapter 11 – Review Questions

Review Question Answers and Rationales

Glossary

Index

Final Examination

Answer Sheet

Course Evaluation



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