Add to favorites
Prior to the adoption of ASU 2014-09 and ASU 2017-05, exchanges of real estate for other real estate are addressed in ASC 845. However, the scope specifically excludes:
Contributions of real estate in return for an unconsolidated real estate investment (such a real estate investment is generally deemed to be a financial asset, and guidance is provided by ASC 970-323); and
Transfers of real estate in exchange for nonmonetary assets other than real estate (the recognition of profit from the exchange is addressed in ASC 360-20-40 and ASC 970-605).
Real estate exchanges must be assessed for commercial substance.We expect most of these exchanges will have commercial substance and, accordingly, will be measured at fair value.
A sale or transfer of an investment in a financial asset (e.g., ownership of stock or partnership interests) that is in substance real estate should follow the guidance in ASC 360-20 or ASC 970-605. Some arranged transactions in which one party purchases real estate for monetary consideration and simultaneously exchanges that real estate property for another may be designed to result in no taxable gain. As discussed in ARM 1300.14, an understanding of the substance of the transaction is required to determine the appropriate accounting
There is specific guidance for the treatment of boot in an exchange of real estate. The application of measurement and recognition guidance will vary depending upon the proportion of boot in the transaction (see ARM 1300.2). The general model, prior to the adoption of ASU 2014-09 and ASU 2017-05 is as follows:
The guidance above will be superseded upon the adoption of ASC 606 and ASU 2017-05. As a result of the new guidance, real estate will be derecognized according to its character as the derecognition of a business, a nonfinancial asset, a financial asset, or as revenue from a customer transaction. Previously derecognition guidance for all real estate was included in an industry-specific standard (ASC 360-20), which at times resulted in the use of ASC 845 for certain nonmonetary exchanges. Generally, real estate transactions will not be in the scope of ASC 845 going forward. See PPE 5, for additional discussion of current and future guidance related to disposals.

Welcome to Viewpoint, the new platform that replaces Inform. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory.

Your session has expired

Please use the button below to sign in again.
If this problem persists please contact support.

signin option menu option suggested option contentmouse option displaycontent option contentpage option relatedlink option prevandafter option trending option searchicon option search option feedback option end slide