Complex accounting decisions don’t have to be faced alone.
In this case study, Michael Mastruzzo, Real Estate Advisory Partner at SAX, shares how our team worked as an extension of management to help a real estate entity navigate held-for-sale, discontinued operations, and impairment considerations—while staying within budget.
Read the case study to learn how SAX approaches complexity with confidence.
Challenge
As a part of its annual reporting process, a real estate entity with a sizable portfolio of investments in commercial office had positioned 4 properties for sale with closing dates after year-end. The Company acknowledged that an analysis would need to be performed on each of these within the context of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10-45, Held for Sale in addition to evaluating whether the properties would need to be evaluated for Impairment pursuant to FASB ASC 360-10-35-40. Although the management team had experience in performing this analysis, they were challenged with bandwidth during this busy time of the year. Further, the Company did not have a large budget to invest on outsourced assistance.
Action
The Company sought the assistance of SAX in order to complement management as an extension of their team for preparation and review of 4 different accounting memos in assessment of the conclusions around accounting for these transactions as Held for Sale, the impact of whether either of these should be concluded as Discontinued Operations and the magnitude of impairment (if any). In addition, the Company requested that SAX prepare the relevant journal entries and footnote disclosure in order to properly reflect the impact of these analyses.
Resolution
SAX partnered with management to accumulate the documents needed for the analysis, developed a structure which parts of the analysis will be prepared by management with review by SAX and which parts will be outsourced entirely to SAX. The collaborative approach helped delineate responsibilities so each of the technical matters could get addressed timely.
Results
SAX’s collaborative approach to this solution enabled the Company to obtain the relevant technical expertise, evidence for its accounting conclusions and analyses in order to support relevant and reliable financial statement disclosure. By identifying the activities where management needed the additional assistance allowed for the Company to work with SAX within its budgetary constraints. For projects such as the one described, SAX focuses on the delivery of quality accounting advisory services and can be nimble with the assistance provided.
“Sax” is the brand name under which Sax LLP and Sax Advisory Group LLC and its subsidiary entities provide professional services. Sax LLP and Sax Advisory Group LLC (and its subsidiary entities) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Sax LLP is a licensed independent CPA firm that provides attest services to its clients, and Sax Advisory Group LLC and its subsidiary entities provide tax and business consulting services to their clients. Sax Advisory Group LLC and its subsidiary entities are not licensed CPA firms.