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Accounting for shrinking real estate footprints : Applying lease termination, abandonment and impairment accounting rules in the real world
Corporate Real Estate Journal,
13
(4),
326-334
(2024)
Abstract
This paper discusses the common accounting treatment most often observed in practice when real estate footprints need to be reduced. The goal is to explain and illustrate through examples the most frequently used accounting terms and show the financial statement outcome in a format designed for real estate professionals. This paper is not an all-inclusive accounting guide. It does provide information that real estate professionals can use to perform initial assessments of real estate’s impact on financial statements and prepare for conversations with their accounting counterparts. Real estate professionals may also use the information presented here to craft suggestions to improve financial statement presentation.
Keywords: lease; accounting; termination; abandonment; impairment
The full article is available to subscribers to the journal.
Author's Biography
Matt Waters is a CPA with 20+ years of lease and energy accounting experience. He currently serves as the Director of Lease Accounting and Sustainability at CoStar Real Estate Manager and has helped over 1,000 companies streamline lease administration and accounting. He is a leading expert in lease management and has previously shared insights with writers from Bloomberg, Reuters and other leading trade publications. Matt is a frequent speaker at lease management, real estate and accounting events. He serves as a faculty member for the CoreNet Global MCR programme. Before joining CoStar, Matt led lease and energy accounting teams at American Tower and The Home Depot. The Home Depot is the world’s largest home improvement retailer and American Tower is one of the largest REITs in the world, with over 100,000 leases. While at The Home Depot, Matt oversaw a project to consolidate the accounting for thousands of leases into one central area to streamline the flow of information and prepare for ASC 842 lease accounting changes. Matt holds a Bachelor’s degree in accounting from Auburn University and an MBA from the University of Alabama at Birmingham.
