How does FAS 141R change the allocation of tangible and intangible assets?
Tangible assets include land, building, site improvements and tenant improvements. Intangible assets include the value of existing leases (including the value of those leases that are above or below existing market rates), customer relationships, leasing commissions and legal and marketing costs. FAS 141R retains the guidance of FAS 141 for identifying and recognizing intangible assets. The value of all acquired assets and assumed liabilities should be based on fair value. The value of the existing leases and the materiality of those leases are some of the major components for the determination of intangible assets value. The acquired tangible and intangible assets and any assumed liabilities can be valued using one of these approaches or a combination: sales comparison, income approach or cost approach valuation. What other changes should CEOs expect from FAS 141R? Expect to provide greater transparency and disclosure to the financial statements’ user. The users will often be lenders
