Losses from derivatives can be linked to bad accounting; the accounting profession must move in one step to current value accounting

Article Abstract:

Many of the losses generated by investments in derivatives, securities tied to underlying assets' cash market value such as futures and options, can be attributed to bad accounting. This situation necessitates that the accounting profession adopt current value accounting procedures for derivatives. The development of an accounting regime for derivatives is in its beginning stages, and current value accounting is the proper technique.

Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Usage, Accounting and auditing, Investments, Derivatives (Financial instruments), Current value accounting

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Breakeven analysis: the third leg of the underwriting stool

Article Abstract:

It is important to evaluate risk and exposure in real estate investment and real estate loan analysis. The debt service coverage ratio compares the level of the net operating income with the debt on the mortgage loan. The loan-to-value ratio evaluates the collateral value of the loan to the exposure of the loan. The breakeven level determines how much total income is used to pay expenses and how much results in return on investment.

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Financing by the pineapple technique: a hypothetical example

Article Abstract:

This pineapple transaction example includes a ground lease, syndicated partnership, leasehold mortgage and operating sublease. Many real estate financial structures can use these constructs. The rate of return for each investment depends upon the amount of risk taken by each of the investors involved in the example.

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