Deferred Gain Guidance

[AliciaK-GHC]

I looked through the Handbook for some guidance on how to record the deferred gain on the sale of real estate. We sold some real estate but are not able to recognize the full gain in the year sold. Based on instructions in Schedule A, the realized gain should be the difference between the proceeds and the BV at the time of sale. There is no way to reflect the deferral.

[Russ]

I reviewed Schedule A, Part 3 and Schedule A - Verification Between Years and neither anticipates deferral of gain on the sale of real estate. As a result, you company will need to make an entry to reverse all or a portion of the gain (see paragraph 18 of SSAP 40 for profit recognition criteria) and establish a deferred gain liability (Line 25, Page 3).

Schedule A, Part 3 and the Schedule A - VBY should reflect the entire gain (even though that is factually not the case) so your real estate inventory will roll forward with no crosscheck errors. Page 8, Exhibit of Capital Gains and Losses should reflect the profit on sale (excluding deferred amount).