Real Estate Accounting: New Regulations Essay -- The Financial Crisis

The level of agony for individuals and businesses continues to rise as they beat losses in the value of their accredited estate of the realm holdings. In approximately circumstances, the fair market value of their property has fallen below the bring or mortgage amount. As a result, many debtors decide to pass away from the loan, resulting in repossession of the property by the lender. As shown in accompaniment A the default rates continue to rise ( join States), affecting business relationship issues such as, revenue recognition, measurement, fair value, and hurt. The reporting of long-term debt is one of the about controversial aras in pecuniary reporting (Kieso, 709). This is because long-term debt such as, loans for real estate investments, has a significant impact on a play alongs cash flows. A companys cash flows are affected by long-term debt as gains and losses are inform through an equity account, such as Other Comprehensive Income (Investments). capital flows are also impacted by reporting the permanent impairment of an asset as a realized loss through moolah and regulatory capital. Individuals and institutions involved in the current credit crisis include the United States Congress, the Federal Reserve Board, Fannie Mae, Freddie Mac, the Department of Housing and Urban Development (HUD), the Securities and metamorphose Commission (SEC), credit agencies, banks, mortgage ingredients and consumers (Carey, 2). The Financial Accounting Standards Board (FASB) is think on the uprising problems in dealing with the reporting of real estate holdings.Within the housing market, a home buyer (debtor) must go first to a financial institution or mortgage broker (originator) who allow for approve and make mortgage loans. Next, the originator may strike to s... ...d a companys continuing involvement in transferred financial assets. Also, Statement 167 requires companies to provide additional disclosures concerning involvement interest entities, allowing significant dislodges in risk exposure to be reported. The new accounting rules leave behind define the real estate market. However, the adjustments to business practices and the respected capital levels will command over time. The accounting issues resolving the real estate market will always exist. Accounting regulations are constantly updated to accommodate with the constant change in the economy. FASB along with the SEC will provide updated accounting rules that will affect the lender and the debtor. Whether the new regulations in accounting issues are handle fairly among all parties that are involved they will have to be carried out in all interrelated transactions.