Accounting GAAPs and accounting treatments for management of property : case studies from Greek real estate market

Abstract

The present article reconciles the GAAP to each other, which apply to accounting recording of fixed assets. It separates the fixed assets, from the side of buyer, as Own Used, Investments, and Inventories and integrates these types of assets into four main portfolio categories. It examines, what are the features to incorporate an element of fixed assets in these portfolios. It analyzes the accounting treatments for each portfolio transaction and the impact of any accounting entry to equity and profit and loss account. It presents the key accounting profitability metrics for any kind of fixed asset. The subject of the article focuses on land and buildings as main part of the total fixed assets of a company. It discusses the influence of taxations and other expenditures at purchase time on the cost and tries to establish a purchase price allocation method for property acquisition. It describes the accounting entries for the revenues, expenses and valuations per portfolio. It makes a comparative analysis between Greek GAAP, IFRS and U.S GAAP for accounting treatments of fixed assets. Finally, it uses the framework of Greek Real Estate Market as experimental setting where the principles of Historic Cost and Fair Value Accounting can be compared. The contribution of this article is that it surveys from a critical perspective, principles, literature and the practice about all the above issues, and presents from accounting point of view a way to managing and monitoring real estate investments.