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Debt Restructurings FASB Statement No. 66, Accounting for Sales of Real Estate FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of FASB Statement No. 144, Accounting for the Impairment or



A sale of real estate is financed by the seller, and the buyer's initial investment is not sufficient for recognition of profit under the full accrual method. The seller meets the conditions of Statement 66 to record a sale and recognizes profit on the installment or cost recovery methods. Subsequently, the buyer defaults on the mortgage to the seller, and the seller forecloses on the property. At the time of foreclosure, fair value of the property is less than the seller's gross receivable but greater than the seller's net receivable, that is, the principal and interest receivable less the deferred profit on the sale and related allowances. The issue is the amount at which the foreclosed property should be recorded. EITF DISCUSSION The Task Force reached a consensus that the foreclosed property should be recorded at the lower of the net amount of the receivable or fair value of the property. [Note: This consensus has been partially nullified by Statement 144. See STATUS section.] Task Force members emphasized that the consensus, to the extent it defines net receivable, assumes that the accrual of interest income on the financing, if any, is appropriate under the circumstances. Some Task Force Copyright © 2007, Financial Accounting Standards Boar

Year: 1992
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