Codification of Staff Accounting Bulletins

Topic 7: Real Estate Companies

1. Removed by SAB 103
2. Removed by SAB 103
3. Schedules Of Real Estate And Accumulated Depreciation, And Of Mortgage Loans On Real Estate
4. Income Before Depreciation

A. Removed by SAB 103

B. Removed by SAB 103

C. Schedules Of Real Estate And Accumulated Depreciation, And Of Mortgage Loans On Real Estate

Facts: Whenever investments in real estate or mortgage loans on real estate are significant, the schedules of such items (see Rules 12-28 and 12-29 of Regulation S-X) are required in a prospectus.

Question: Is such information also required in annual reports to shareholders?

Interpretive Response: Although Rules 14a-3 and 14c-3 permit the omission of financial statement schedules from annual reports to shareholders, the staff is of the view that the information required by these schedules is of such significance within the real estate industry that the information should be included in the financial statements in the annual report to shareholders.

D. Income Before Depreciation

Facts: Occasionally an income statement format will contain a subtitle or caption titled “Income before depreciation and depletion.”

Question: Is this caption appropriate?

Interpretive Response: The staff objects to this presentation because in the staff’s view the presentation may suggest to the reader that the amount so captioned represents cash flow for the period, which is rarely the case (see ASR 142).

http://www.sec.gov/interps/account/sabcodet7.htm