NEWS RELEASE 02/20/03
FASB Issues Exposure Draft on Accounting for Real Estate Time-Sharing Transactions
Norwalk, CT, February 20, 2003—Concurrent with the issuance of a Proposed Statement of Position, Accounting for Real Estate Time-Sharing Transactions by the Accounting Standards Executive Committee (AcSEC) of the American Institute of Certified Public Accountants, the Financial Accounting Standards Board (FASB) has issued an Exposure Draft, Accounting for Real Estate Time-Sharing Transactions, an amendment of FASB Statements No. 66 and 67. Both proposals can be accessed from either the FASB website or the AICPA website at www.aicpa.org. The comment periods conclude on April 30, 2003.
FASB Statement No. 66, Accounting for Sales of Real Estate, was issued in 1982 and adopted the specialized profit recognition principles in certain AICPA Industry Accounting Guides and AICPA Statements of Position. Statement 66 provides limited guidance for time-sharing transactions.
Subsequent to the issuance of Statement 66, extensive changes in the methods used by the time-sharing industry to offer its products resulted in divergent accounting practices. Those divergent practices centered around revenue recognition, recording of credit losses and the treatment of selling costs. In response, AcSEC developed the proposed SOP which applies to all time-sharing transactions.
The proposed FASB Statement would amend Statement 66 and Statement 67 to exclude time-sharing transactions from the scope of those Statements should the proposed SOP be issued as final.
Both proposals would be effective for financial statements issued for fiscal years beginning after June 15, 2004. Earlier application would be encouraged.
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Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.
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