# ASC 360-970-55: Property, Plant, and Equipment — Real Estate—General — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/360/970/#55-implementation-guidance-and-illustrations)

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## ASC 360-970-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/360/970/#55-implementation-guidance-and-illustrations)

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### Real Estate Syndication

#### Implementation Guidance

##### [360-970-55-1](https://asc.understandingaccounting.org/asc/360/970/#360-970-55-1)

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In the following example, a real estate developer sells a recently constructed office building to a public real estate [blind pool](https://asc.understandingaccounting.org/glossary/b/#blind-pool-or-partially-blind-pool-partnerships "Partnerships in which investment units are sold before some or all of the properties to be acquired are identified.") syndication. Because the property is not yet fully occupied, the general partner of the syndication negotiates a master leaseback agreement with the seller at the date of the sale. Under the terms of the agreement, the syndication pays a fee to the seller and the seller leases the vacant space at a market rate, at the sale date, for a two-year period. This payment is described as a fee in exchange for signing a master lease or as an escrowed portion of the purchase price. The syndication will relieve the seller of its future lease payment obligations on space the seller subsequently subleases to others if the sublease meets certain criteria. If the seller is unable to lease the vacant space during the two-year period, the rental payments to the syndication would substantially exceed the fee paid by the syndication.

##### [360-970-55-2](https://asc.understandingaccounting.org/asc/360/970/#360-970-55-2)

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Paragraph [970-360-25-1](https://asc.understandingaccounting.org/asc/360/970/#360-970-25-1) states payments to and receipts from the seller should be treated by the syndication as adjustments to the basis of the property and will affect future depreciation.

##### [360-970-55-3](https://asc.understandingaccounting.org/asc/360/970/#360-970-55-3)

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Topic 815 would apply if the terms of the agreement meet the definition of a derivative. The agreement would typically meet the scope exception in paragraph [815-10-15-13](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-13) relating to the sales or service revenues of one of the parties to the contract since the underlying is the leasing rental revenue of the syndicate, in which case that Topic would not affect the accounting in this example.

### Real Estate Project Costs

##### [360-970-55-4](https://asc.understandingaccounting.org/asc/360/970/#360-970-55-4)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [360-970-55-5](https://asc.understandingaccounting.org/asc/360/970/#360-970-55-5)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).