The rule maker for financial reporting is developing guidelines for a new standard that would prohibit a vast majority of commercial real estate investors from depreciating property values in their financial reports.
The Financial Accounting Standards Board, or FASB, has issued an exposure draft of the proposed guidelines and is seeking public comment on them until Jan. 5.
The "Topic 973" proposal defines what would be considered an investment-property entity, a business classification that would have to use fair-value accounting. Under that accounting, reporting companies record profits and losses for investment properties based on their market values, and would not depreciate their values in financial reports.
Read more...Commercial Real Estate Direct - FASB Develops Guidelines for Fair-Value Accounting Proposal