LEASE AND FINANCING OBLIGATIONS

6 Months Ended

Jun. 30, 2015

LEASE AND FINANCING OBLIGATIONS [Abstract]

13.	LEASE AND FINANCING OBLIGATIONS

In 2014, the Company's subsidiary in South Korea entered into a lease agreement with a third party landlord for office buildings. In April 2015, the Company and the landlord entered into a new lease agreement on terms generally consistent with the 2014 lease. As part of the lease, the landlord agreed to renovate an existing building (the "Existing Building") and construct a new building (the "New Building") adjacent to the Existing Building.

The Company accounts for its lease of the Existing Building as an operating lease. As an inducement to enter into the lease, the landlord agreed to make certain improvements on behalf of the Company to the Existing Building. The improvements have been accounted for by the Company as a tenant incentive.

The Company has concluded that it is the deemed owner (for accounting purposes only) of the New Building during the construction period under build-to-suit lease accounting.

At June 30, 2015, the Company had recognized $21.3 million as the value of the New Building offset by depreciation for the period of $0.1 million. The Company also booked a corresponding financing obligation in the amount of $11.5 million, net of a $9.8 million deposit paid directly to the landlord, as part of Other liabilities in its consolidated balance sheets. The Company does not expect to recognize any additional project costs associated with the construction of the New Building or any additional financing obligation.

NU SKIN ENTERPRISES, INC.

Notes to Consolidated Financial Statements

The Company had also recognized a $6.2 million tenant incentive asset and deferred tenant incentive liability associated with the Existing Building at June 30, 2015.