November 1, 2010
Lucernex real estate finance expert Jim Duport (see Jim’s management summary here), after completing an upgrade to our core financial engine to support the new proposed FASB / GAAP rules, discusses an interesting finding – in certain circumstances, the new GAAP can be cheaper.
This is the first in a series of Blogs by Jim describing his findings during the process of developing the architecture within the core Lucernex financial engine to handle the new proposed FASB rules.
I started the substantial upgrade of Lx LseMod version 15, including changes to the core Lucernex financial engine, in July. After over 500 hours, it is virtually done. Since it includes a Transaction Date that can be different from the Lease Commencement Date (even exact days such as the lease starting on the 12th of the month), and Renewal Option Rent Calculations, I have been able to “test” a variety of real world scenarios under the Proposed New GAAP. Note: Lx LseMod provides for a 30-year lease term and 5 renewal options for a total of another 30 years. (more…)
March 15, 2010
Lucernex expert Jim Duport (see Jim’s management summary here) discusses the 5 rules you need to know about GAAP/SOX. Learn more about Lx LseMod Corporate for lease analysis including GAAP impact.
1. Rent straight-lined over the term if rent increases are known. |
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| Impact: | First Fiscal year cost will increase |
January 31, 2010
Lucernex expert Jim Duport (see Jim’s management summary here) provides this response:
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In essence, GAAP (Generally Accepted Accounting Principals) rent is an averaging of the rent over the term taking into account rent abatement and fixed/known rent increases. The rent cost calculated based on GAAP is then charged/booked to the Income Statement / Profit & Loss (P&L) statement. The P&L statement is what is reported to the Securities and Exchange Commission (SEC) and is used for tax purposes. In many corporations, the GAAP rent is also the cost that is charged to the real estate department’s or end-user’s budget.
What happens if there is free rent and rent increases are based on the Consumer Price Index (CPI), a “CPI GAAP analysis”? Since increases are not a “known” value, it is difficult to apply GAAP to a lease with CPI increases.