This article is from the Australian Property Journal archive
THE Financial Reporting Panel has found in favour of ING Real Estate Entertainment Fund in its dispute against the corporate regulator.
In June this year, IEF protested against the Australian Securities and Investments Commission’s proposed alternative accounting treatment for the gaming and liquor licenses held by the fund’s properties.
IEF said whilst the accounting treatment does not affect the market value of those properties and will not affect compliance with any of the financial covenants under the fund’s debt facilities, the proposal would impact the classification of assets between investment properties and intangible assets within financial reports and may reduce reported net assets.
Previously IEF’s CEO Daniel Hargreaves said that adopting ASIC’s proposal would reduce approximately 1 cent per unit in net asset value and a reduction of approximately 23 cents per unit in net tangible assets.
“ASIC proposes that the gaming and liquor licences be separated from the land and buildings and accounted for at initial cost less any accumulated impairment charges. Under the proposal, rent received by IEF would have to be dissected into rent referable to the land and buildings, and that referable to the licences. The fair value of the land and buildings would then have to be calculated by reference to the rent generated by the land and buildings only.
“Under the ASIC proposal, the licences would be carried at cost less any accumulated impairment charges, and may not be revalued above cost. Consequently, reported net assets may be lower than under IEF’s present accounting policies,” he added.
The FRP announced that after considering both IEF’s current accounting treatment and the alternate accounting treatment proposed by ASIC, the FRP has determined that the existing accounting treatment by IEF is appropriate.
Australian Property Journal
