Real Estate Accounting Made Easy

by Ebisike, Obioma A.

• ISBN13: 9780470603390
• ISBN10: 0470603399
• Format: Hardcover
• Copyright: 2010-08-02
• Publisher: Wiley

Summary

Boiling down the complicated details of real estate accounting into manageable essentials, Real Estate Accounting Made Easy equips you with the tools you need to successfully run the financial and accounting operations within your organization.

Author Biography

Obioma Anthony Ebisike, a leading authority on real estate accounting, offers workable information in basic terminology. Even if you do not have a professional grasp of accounting principles and financial reporting, this book makes it all clear with accounting rules explained in terms anyone can understand, to help you better fulfill your duties. Suitable for investors, analysts, accountants, and auditors, Real Estate Accounting Made Easy is your essential guide for a clear, concise explanation of real estate accounting finance.

Table of Contents

About the Author	p. xi
Preface	p. xiii
Introduction to Real Estate	p. 1
Types of Real Estate Assets	p. 1
Common Industry Terms	p. 8
Basic Real Estate Accounting	p. 17
History of Double-Entry Bookkeeping	p. 17
Types of Accounts	p. 18
Accounting Methods	p. 21
Recording of Business Transactions in the Accounting System	p. 23
Journal Entries	p. 24
Basic Accounting Reports	p. 26
Forms of Real Estate Organizations	p. 37
Sole Ownership	p. 38
Common and Joint Ownership	p. 38
Partnerships	p. 39
Joint Ventures	p. 41
Corporations	p. 41
Limited Liability Companies	p. 43
Real Estate Investment Trusts	p. 44
Accounting for Operating Property Revenues	p. 47
Types of Leases	p. 47
Revenue Recognition	p. 52
Lease Classification	p. 53
Additional Cost Recoveries	p. 55
Operating Expenses Gross-up	p. 56
Contingent Rents	p. 57
Rent Straight-Lining	p. 58
Modification of an Operating Lease	p. 61
Sublease of Operating Lease	p. 65
Accounting for Operating Property Expenses	p. 67
Operating Costs	p. 67
Operating Expenses Reconciliation and Recoveries	p. 77
Most Common Recoverable Operating Expenses	p. 78
Most Common Nonrecoverable Operating Expenses	p. 78
Calculating Tenant Pro-Rata Share of Expenses	p. 79
Lease Incentives and Tenant Improvements	p. 83
Lease Incentives	p. 83
Tenant Improvements	p. 85
Tenant Improvement Journal Entries	p. 85
Further Comparison of Lease Incentives and Tenant Improvements	p. 86
Differences in Cash Flow Statement Presentation	p. 87
Demolition of Building Improvement	p. 87
Budgeting for Operating Properties	p. 89
What Is a Budget?	p. 89
Components of a Budget	p. 89
Variance Analysis	p. 95
Sample Operating Property Variance Analysis	p. 95
Salient Points on a Variance Analysis	p. 98
Market Research and Analysis	p. 99
Market Research Defined	p. 99
Market Analysis Defined	p. 99
Market Research: Practical Process	p. 100
Real Estate Valuation and Investment Analysis	p. 107
What Is Real Estate Valuation?	p. 107
Approaches to Real Estate Valuation	p. 108
Financing of Real Estate	p. 119
Equity	p. 119
Debt Financing	p. 119
Other Financing Sources	p. 122
Types of Loans	p. 123
Debt Agreements	p. 123
Financing Costs	p. 127
Relationship Between a Note and a Mortgage	p. 128
Accounting for Financing Costs	p. 128
Accounting for Real Estate Investments and Acquisition Costs	p. 129
Methods of Accounting for Real Estate Investments	p. 129
Purchase Price Allocation of Acquisition Costs of an Operating Property	p. 135
Accounting for Project Development Costs on GAAP Basis	p. 139
Stages of Real Estate Development Project	p. 139
Postdevelopment Stage	p. 147
Development Project Revenue Recognitions	p. 149
Full Accrual Method	p. 150
Deposit Method	p. 154
Installment Method	p. 156
Reduced-Profit Method	p. 157
Percentage-of-Completion Method	p. 159
Cost Recovery Method	p. 170
Audits	p. 173
Audit Overview	p. 173
Types of Audits	p. 179
Index	p. 185
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