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Intermediate1.5 hours16 terms

Discontinued Operations: REI Terminology Guide

This curated collection offers key terms for understanding discontinued operations in real estate investment. It's designed as a quick reference for concepts you might encounter when analyzing property divestitures or changes in business strategy. Use it to clarify terminology and support your learning journey.

Term Collection

1

Gain on Sale

The profit realized when an asset, such as real estate, is sold for more than its adjusted cost basis. It's a key metric for investors to understand their profitability and tax obligations.

Beginner2-3 min
2

Net Income from Discontinued Operations

Net Income from Discontinued Operations represents the profit or loss from a segment of a business that has been disposed of or is classified as held for sale, reported separately on the income statement after tax.

Advanced5 min
3

Strategic Divestment

Strategic divestment is the planned sale or disposal of an investment property or portfolio to achieve specific financial or strategic objectives, often driven by market shifts, portfolio rebalancing, or risk mitigation.

Intermediate5 min
4

Capital Gains Tax

Capital Gains Tax is a tax on the profit realized from the sale of a non-inventory asset, such as real estate, calculated as the difference between the selling price and the adjusted cost basis.

Intermediate13-14 min
5

Depreciation Recapture

Depreciation recapture is an IRS rule that taxes the gain from the sale of depreciated property at ordinary income tax rates, up to the amount of depreciation previously claimed, ensuring tax benefits are accounted for upon sale.

Intermediate15-18 min
6

Financial Reporting Standards

Financial Reporting Standards (FRS) are a set of accounting principles, rules, and procedures that companies must follow when preparing their financial statements, ensuring consistency, transparency, and comparability for stakeholders.

Advanced6 min
7

1031 Exchange

A 1031 Exchange allows real estate investors to defer capital gains and depreciation recapture taxes when selling an investment property by reinvesting the proceeds into a new "like-kind" investment property within strict IRS timelines.

Advanced15-18 min
8

Impairment Loss

An impairment loss occurs when an asset's carrying value on the balance sheet exceeds its recoverable amount, indicating a decline in its future economic benefits or fair value.

Advanced5-6 min
9

Book Value

Book Value represents the net asset value of a company or property as recorded on its financial statements, calculated as total assets minus total liabilities.

Intermediate2-3 min
10

Discontinued Operations

Discontinued operations represent a component of an entity that either has been disposed of or is classified as held for sale, and represents a strategic shift that will have a major effect on an entity's operations and financial results.

Advanced7-9 min
11

Cash Flow from Discontinued Operations

Cash flow from discontinued operations represents the net cash generated or used by a business segment that has been disposed of or is classified as held for sale, reported separately from continuing operations on the statement of cash flows.

Advanced5-6 min
12

Held for Sale Classification

Held for Sale Classification is an accounting designation for non-current assets or disposal groups whose carrying amount will be recovered primarily through a sale transaction rather than through continuing use, requiring specific criteria to be met under GAAP and IFRS.

Advanced8-9 min
13

Income Statement Presentation

Income Statement Presentation for real estate investments involves the structured reporting of a property's revenues, operating expenses, and non-operating items over a specific period, providing a clear view of its financial performance and profitability.

Advanced5 min
14

Segment Reporting

Segment reporting is a financial disclosure requirement that provides disaggregated financial information about an entity's operating segments, enabling investors to better understand the various business activities and geographical areas in which a company operates.

Advanced5 min
15

Disposal Group

A disposal group, under IFRS 5, represents a group of assets to be disposed of, by sale or otherwise, together with any directly associated liabilities. It is classified as held for sale or held for distribution to owners if specific criteria are met, impacting its measurement and presentation in financial statements.

Advanced5 min
16

Loss on Sale

A loss on sale occurs when an asset, such as a real estate property, is sold for less than its adjusted cost basis, resulting in a negative return for the seller.

Beginner3 min

Common Questions