Like this weekend.
I’m building a model to measure impacts on financial statements caused by operating/finance leases, lease restructures, owned assets, sale-leasebacks, ground leases.. the works.
Asking for study material recommendations beyond FAS13/ASC842. Help is greatly appreciated and discussion encouraged TREMENDOUSLY
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Read Linneman’s book
Would also be interested... RE accounting doesn’t get enough shine on here thinking about it.
Buying Linneman’s book as soon as Barnes and Nobles opens today, thank you.
Currently an office leasing broker on a team that chases mega accounts (banks, health systems, etc), and 95% of our competition doesn’t know a lick about this topic, let alone the accounting changes going into effect later this year. Should be a big money maker for this Money_Man
Money_Man What accounting changes are you referring to?
All leases will now (effective 2019, applied retroactively to 2017) need to be accounted for on the balance sheet as a right-of-use asset and a lease liability. Leases classified as Operating (most property leases) were previously off-the-books, so this change can be monumental for companies as it will affect liquidity ratios (adds a current liability, but not a current asset)
cpgame just realized that the latest publication of Real Estate Finance and Investments was Jan 2016, whereas the new lease accounting rules were issued in Feb 2016. Obviously still worth the purchase, but do you think it will have what I’m looking for? Specifically how operating leases now affect the balance sheet
Is this relative to the FASB changes coming down the pike?
Its exactly the FASB changes coming down the pike
Mega accounts generally have a corporate real estate division within the company, so I would assume these changes are on their radar. All of the big shops have published whitepapers summarizing the effects of the changes to FASB, which would be a good place to start. I am a Broker too and have used this to get in front of prospects, however they tend to be smaller and less sophisticated companies using us as their ad hoc real estate department.
Right, need this for pitch purposes to demonstrate our superiority over competitors, but also for the clients treating us as their outsourced RE department.
Can't comment specifically on FASB/Accounting rules, per se, but I imagine studying and messing around with various three-statement financial modeling might be beneficial. Seems like you already know the basics of modeling and are asking more about the accounting rules - going through these models might spark interesting questions or reaffirm things you've read/know/don't know (changes year-over-year linking the balance sheet to income statement etc.)
Picked this off another post on WSO if it's helpful at all: https://www.macabacus.com/operating-model/introduction
Helpful, thank you. And yes, asking more specifically about accounting rules and how to book your right-of-use asset, tenant improvements, interest expense, bargain purchase option, deferred tax benefits, etc.
Help, I’ve fallen into a worm hole and I can’t get up.
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