With the release of FASB’s new Accounting Standards Update (ASU) No. 2013-08: Amendments to the scope, measurement, and disclosure requirements of investment companies, real estate investment entities must determine the impact to their accounting and disclosure requirements, including revised criteria that define an investment company, clearer measurement guidance and new required disclosures.
This paper discusses the investment company accounting and disclosure requirements, and specifically how they impact real estate investment entities. It also highlights the differences between IFRS and U.S. GAAP, and the assessment of whether an entity meets the investment company criteria.
For real estate investment entities that did not apply investment company accounting in the past, the flexibility in assessing whether the entity’s business activities are consistent with those of an investment company may allow the entities to conclude that they meet the new investment company criteria.