FASB

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Kshowalter
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47973
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FASB
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2010-11-07 18:18:23
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  1. FASB, ASC (accounting standards Codification)

    is the
    single source of authoritative, nongovernmenta U.S. generally accepted accounting principles (US GAAP)
  2. 972
    Real Estate - Common Interest Realty Associations
  3. Fund Reporting

    Assets transferred to the CIRA by the developer and recognized in the balance sheet shall be reported
    as additions to the operating fund blance. A CIRA may not need to use fund reporting if it dows not assess for future major repairs and replacements.
  4. CIRA
    Common interest realty association

    An association, also know as a community association, responsible for the governanace aof the common interest community, for which it was established to serve. A CIRA is generally funded by its members via periodic assessements by the cira so that it can perform its duties, which include management services and maintenance, repair, and replacement of the common property, among other duties established in the governing documents and by state statue.
  5. Common interest realty association that assess owners annually for pertions of future major repairs and replacements shall
    report thaose asses amounts separately from amounts assessed for normal operations. If a cira uses fund accounting, amounts assessed for future major repairs and replacements shall be reported in the major repair and replacement fund separately from transactions in the operating fund.

    Transers between funds that are not part of the current period operating revenues shall be presented only in a statement of changes in fund blances.
  6. Financial statement requirements

    Full presentations of financial statements for cira presented in conformity with GAAP shall include all of the following:
    • Balance sheet
    • Statement of revenues and expenes
    • Statement of changes in fund balances or a statement of changes in member's equity if nonfund reporting is used
    • Statment of cash flows
    • Notes to financial statements
  7. Information about the operating fund shall present assets, liabilities, and the fund balance specifically associated with the cira normal maintenance and service activities. For example:
    the operating fund shall include information abount cash, assessments receivable, prepaid expenses, and trade payables. Property and equipment, if reported as assets, are generally reported in the operting fund.

    If the amount of property and equipment held by a cira is significant, the cira may account for it in a serparate fund.
  8. 972-205-45-8 The presentation of information about the fund for major repairs and replacements(the replacement fund) shall include information about assets, liabilities, and the fund balancespecifically associated with the common interest realty association's long-term major repair and
    replacement activities. The fund includes all assets that are held, for example, for the futurereplacement of roofs, roads, and furniture (some common interest realty associations may have adeferred maintenance fund which is used for painting or refinishing of building exteriors). Those assetsusually consist of cash, marketable securities, and short-term investments. Liabilities in that fundgenerally are for work done on contracts for major repairs and replacements.
  9. 972-205-45-9 The statement of revenues and expenses shall present information about all
    assessments, other revenues, and expenses. All common interest realty association activities, exceptfor replacement fund activities, shall be presented in the operating fund in the statement of revenuesand expenses unless the common interest realty association has other funds such as a deferredmaintenance fund or a capital improvement fund, and so forth. Depreciation shall be reported as anexpense of the fund in which the asset is reported.
  10. 972-205-45-10 The financial statements shall include a statement of changes in fund balances,which reconciles
    beginning and ending fund balances with results of operations for the period. Thestatement may be presented separately or may be combined with the statement of revenues andexpenses. Permanent transfers between funds shall be presented as interfund transfers in thestatement of changes in fund balances, not as revenues. For example, if the board of directors transfersexcess operating funds to the replacement fund at the end of an operating year, the interfund transfershall be shown in the statement of changes in fund balances, not by reclassifying revenues.
  11. Interfund Receivables and Payables

    972-205-45-11 Common interest realty associations may have interfund receivables and payablesresulting from any of the following:
    a. Obligations of one fund are paid for with the assets of another fund.

    b. Amounts assessed for the activities of one fund are collected, but not transferred, by anotherfund.
  12. 972-205-45-12 Corresponding interfund receivables and payables shall be presented to highlight thetransactions resulting in those balances and to provide
    information about amounts assessed andcollected that were not used in accordance with the budget.
  13. > Unclassified Balance Sheets

    972-205-45-13 Common interest realty associations can generally present unclassified balancesheets. Common interest realty associations having significant
    commercial operations, however, shouldconsider presenting classified balance sheets.
  14. 972-235-50-1 In addition to disclosures required by generally accepted accounting principles (GAAP)for other entities, the notes to a common interest realty association's financial statements shallalso include disclosures about all of the following:
    a. The common interest realty association's legal form (corporation or association) and that ofthe entity for which it provides services (for example, condominium, homeowners association,cooperative), areas it controls, and the number of units. (In place of the number of units,cooperative housing corporations may disclose the number of shares and time-shareassociations may disclose the number of weeks.)

    b. Services (such as maintenance) and subsidies provided by the developer

    c. The number of units (shares for cooperative housing corporations and weeks for time-shareassociations) owned by the developer.
  15. Future Major Repairs and Replacements

    972-235-50-2 A common interest realty association shall disclose information in its notes to financialstatements about its funding for future major repairs and replacements. Disclosures about such fundingshall include all of the following:
    a. Requirements, if any, in statutes or the common interest realty association's documents (ormortgage or governmental bodies funding requirements, for example, Federal HousingAdministration often has such requirements) to accumulate funds for future major repairs andreplacements and the common interest realty association's compliance or lack of compliance withthem

    b. A description of the common interest realty association's funding policy, if any, and compliancewith that policy

    c. A statement that funds, if any, are being accumulated based on estimated future (or current)costs, that actual expenditures may vary from these estimates, and that the variations may bematerial

    d. Amounts assessed for major repairs and replacements in the current period, if any

    e. A statement indicating whether a study was conducted to estimate the remaining useful livescommon property components and the costs of future major repairs and replacements.
  16. Common interest realty associations that fund future major repairs and replacements by specialassessments or borrowings when needs occur shall disclose that information.
    Common interest realty associations that fund future major repairs and replacements by specialassessments or borrowings when needs occur shall disclose that information.
  17. Required Supplementary Information972-235-50-3

    Common interest realty associations shall disclose the following as unauditedsupplementary information:
    a. Estimates of current or future costs of future major repairs and replacements of all existingcomponents, such as roofs, including estimated amounts required, methods used to determine thecosts, the basis for calculations (including assumptions, if any, about interest and inflation rates),sources used, and the dates of studies, made for this purpose, if any. There is no requirement forcommon interest realty associations to obtain studies prepared by professional engineers. Theestimates may be made by the board of directors or estimates obtained from licensed contractors.

    b. A presentation of components to be repaired and replaced, estimates of the remaining usefullives of those components, estimates of current or future replacement costs, and amounts of fundsaccumulated for each to the extent designated by the board.
  18. Common Real Property

    972-360-25-1 Cooperatives shall recognize common real property as
    assets. Because of their legalstructure, cooperatives have title to all their common property and have the authority to dispose of itand retain the proceeds. Other common interest realty associations, such as condominiums andhomeowners associations, have adopted other practices for recognizing common real property.
  19. Real Property Directly Associated with the Units

    972-360-25-2 Most common interest realty associations other than cooperatives, regardless ofwhether they have title, do not recognize as assets
    real property directly associated with the units.
  20. > Real Property Not Directly Associated with the Units

    972-360-25-3 Most common interest realty associations other than cooperatives recognize realproperty not directly associated with the units as assets when the common interest realty associationhas title or other evidence of ownership of the property and any of the following conditions are met:
    a. The common interest realty association can dispose of the property, at the discretion of itsboard of directors, for cash or claims to cash, with the common interest realty association retainingthe proceeds.

    b. The property is used by the common interest realty association to generate significant cashflows from members on the basis of usage or from nonmembers.
  21. 972-360-25-4 However, some common interest realty associations recognize as assets all realproperty to which they have title or other evidence of ownership and
    that is not directly associated withthe units, regardless of whether either of the above conditions is met.
  22. > Personal Property972-360-25-5

    Common interest realty associations shall recognize common personal property, suchas furnishings, recreational equipment, maintenance equipment, and work vehicles, that is
    used by thecommon interest realty association in operating, preserving, maintaining, repairing, and replacingcommon property and providing other services, as assets.
  23. 972-430-25-1 Deferred revenue
    may include items such as special assessments designated forspecific costs that have not yet been incurred. Such amounts shall be reported as revenues when thecorresponding liabilities and expenses are reported.
  24. 972-605-25-1 Special assessments shall be reported as
    revenue, unless they are deferred inaccordance with the guidance in paragraph 972-430-25-1. See Section 972-430-25 for guidanceconcerning recognition of deferred revenue from special assessments.
  25. 972-605-45-1 Periodic assessments for funding future major repairs and replacements shall bereported in
    the replacement fund in statements of revenues and expenses in the periods in which theyare assessed, regardless of whether they have been collected or expended.
  26. 972-605-45-2 Information about revenues shall include amounts for regular and special assessmentsfrom members and amounts for such items as assessments charged to the developer, developer
    contributions and subsidies, lawsuit settlements, interest income, laundry and vending machine income,or special-use charges from members and nonmembers. Individual categories of revenues may becombined if not material. Interest earned shall be presented as revenue of the appropriate fund unlessthe common interest realty association has a specific policy to treat it otherwise
  27. 972-605-50-1 In addition to disclosures required by generally accepted accounting principles (GAAP)for other entities, the notes to a common interest realty association's financial statements shallalso include disclosures about both of the following:
    a. The proposed use for funds collected in special assessments

    b. Assessments that were used for purposes other than those for which they were designated.
  28. > Significant Sources of Revenue

    972-605-50-2 The developer or other parties may provide the common interest realty associationwith some
    of its revenues. If 10 percent or more of a common interest realty association's revenues arederived from any one source, that fact and the amount of revenue from each source shall be disclosed.
  29. 972-720-25-1 Common interest realty associations that use fund accounting shall chargeexpenditures for major repairs or replacements to the fund or funds
    established for major repairs orreplacements. If an expenditure from the major repairs and replacement fund relates to commonproperty recognized as an asset, the amount expended shall be reported as a transfer to the operatingfund (or property fund, if such a fund is established).
  30. 972-740-45-1 Because income taxes are generally not related to the excess of revenues overexpenses as in commercial entities, they may be presented in the same manner as other
    operatingexpenses in the statement of revenue and expenses. Common interest realty associations shouldfollow the guidance in Topic 740.
  31. 972-740-50-1 In addition to disclosures required by generally accepted accounting principles (GAAP)for other entities, the notes to a common interest realty association's financial statements shall includedisclosures about both of the following:
    a. The common interest realty association's income tax filing status and its liability for incometaxes

    b. Credits from taxing authorities that will be phased out in future reporting periods.
  32. 972-850-50-1 Some individual board members, officers, or developers may provide commoninterest realty associations with
    insurance, maintenance, or management services. Such servicesmay require disclosure in conformity with Topic 850.

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