Accountants' Handbook, Volume Two, Special Industries and Special Topics, 12th Edition

Chapter 31

Real Estate and Construction

Benedetto Bongiorno, CPA, CRE

Natural Decision Systems, Inc

31.1 Real Estate Industry

(a) Overview

(b) FASB Accounting Standards Codification

31.2 Real Estate Transactions

(a) Analysis of Transactions

(b) Sales of Real Estate

(c) Criteria for Sales Recognition

(d) Adequacy of Down Payment

(i) Size of Down Payment

(ii) Composition of Down Payment

(iii) Inadequate Down Payment

(e) Receivable from the Buyer

(i) Assessment of Collectability of Receivable

(ii) Amortization of Receivable

(iii) Receivable Subject to Future Subordination

(iv) Release Provisions

(v) Imputation of Interest

(vi) Inadequate Continuing Investment

(f) Seller's Continued Involvement

(i) Participation Solely in Future Profits

(ii) Option or Obligation to Repurchase the Property

(iii) General Partner in a Limited Partnership with a Significant Receivable

(iv) Lack of Permanent Financing

(v) Guaranteed Return of Buyer's Investment

(vi) Other Guaranteed Returns on Investment—Other than Sale-Leaseback

(vii) Guaranteed Return on Investment—Sale-Leaseback

(viii) Services Without Adequate Compensation

(ix) Development and Construction

(x) Initiation and Support of Operations

(xi) Partial Sales

(g) Sales of Condominiums and Tenants in Common

(i) Criteria for Profit Recognition

(ii) Methods of Accounting

(iii) Estimated Future Costs

(h) Retail Land Sales

(i) Criteria for Recording a Sale

(ii) Criteria for Full Accrual Method

(iii) Full Accrual Method

(iv) Percentage-of-Completion ...