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:
A sale of improvements or integral equipment with no sale or plans for a sale of the land.
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.
Securities accounted for under FAS 115.
Profit from real estate sales is recognized in full, provided the following:
The profit is determinable (i.e., the collectibility of the sales price is reasonably assured or the ...