Summary of Statement No. 67

Accounting for Costs and Initial Rental Operations of Real Estate Projects (Issued 10/82)

Summary

This Statement extracts the specialized accounting principles and practices from AICPA Statements of Position 80-3, Accounting for Real Estate Acquisition, Development, and Construction Costs, and 78-3, Accounting for Costs to Sell and Rent, and Initial Rental Operations of,  Real Estate Projects, and those in the AICPA Industry Accounting Guide, Accounting for Retail Land Sales, that address costs of real estate projects. This Statement establishes whether costs associated with acquiring, developing, constructing, selling, and renting real estate projects should be capitalized. Guidance also is provided on the appropriate methods of allocating capitalized costs to individual components of the project.

This Statement also establishes that a rental project changes from nonoperating to operating when it is substantially completed and held available for occupancy, that is, upon completion of tenant improvements but no later than one year from cessation of major construction activities. At that time, costs should no longer be capitalized.