O'Reilly logo

Wiley GAAP 2008 by Colorado Steven M. Bragg Englewood, Ralph Nach American Express Tax and Business Inc., Barry J. Epstein

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Concepts, Rules, and Examples

Real Estate Sales other than Retail Land Sales

FAS 66 scope

FAS 66, Accounting for Sales of Real Estate, established standards applicable to all real estate sales for all types of businesses. However, variations in applying this Statement in practice suggested that additional guidance was needed. FIN 43 clarified that FAS 66 is consistent with the sale‐leaseback requirements of FAS 98, Accounting for Sales and Leasebacks.

FIN 43 explicitly states that real estate sales transactions under FAS 66 include real estate with property enhancements or integral equipment. This Interpretation defines property improvements and integral equipment as “any physical structure or equipment attached to real estate or other parts thereof, that cannot be removed and used separately without incurring significant cost.” Examples include an office building or manufacturing plant.

This interpretation also identifies transactions excluded from the provisions of FAS 66 as follows:

  1. A sale of improvements or integral equipment with no sale or plans for a sale of the land.

  2. A sale of stock, net assets of a business, or a segment of a business which contain real estate except in cases in which an “in‐substance” real estate sale occurs.

  3. Securities accounted for under FAS 115.

Profit recognition methods

Profit from real estate sales is recognized in full, provided the following:

  1. The profit is determinable (i.e., the collectibility of the sales price is reasonably assured or the ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required