[Transcript from video]
Bryana (00:02.602)
Hi, I’m Brianna. I’m an intern here at Florida Investment Real Estate and I’m a junior at the University of Tampa. And today we’ll be talking to another one of our fellow agents, Ms. Jill Coulter.
Jill Coulter (00:15.436)
Hi Brianna, how are you doing today?
Bryana (00:17.642)
Good yourself.
Jill Coulter (00:20.172)
We started this series of lease lounge when Brianna came to us as an intern and she had some of the same questions that our clients had. So what is the question today?
Bryana (00:32.106)
Well, recently I’ve been hearing a little bit of talk around the office about one of our clients trying to renegotiate the terms of their loan. You were helping them and you mentioned something about a change in accounting regulations that applied to them, if you could elaborate more on that for me.
Jill Coulter (00:49.868)
Absolutely, there are some big changes and it’s really important that people pay attention because so many people are being caught off guard on with this and it applies to how your leases are accounted for in your financial statements. They are now considered a debt and need to be accounted for in those financial statements.
Bryana (01:18.186)
What does that mean?
Jill Coulter (01:20.364)
Well, that means when a business goes to apply for a loan or renegotiates their current loans, that the bank or the financial institution is going to need to see on their financial statements that debt of the lease liability. They will also come into play if they have investors or different silent partners will want to see. It helps with the transparency of their financial security. Also, if any of these businesses are doing any government contracts, the government will want to see their financial statements and this now, your leases are now part of the regulations required to be notated on your financial statements.
Bryana (02:13.93)
that apply too.
Jill Coulter (02:15.564)
Well, it applies to both landlords and tenants, but mostly to the tenants because it is a large liability that they are contractually obligated to pay throughout the terms of their lease.
Bryana (02:31.818)
it accounted for? Is it like a 10 -year lease and like just take 10 % of it or…
Jill Coulter (02:37.868)
Well, there’s discounts that are applied and it is, they do a little bit of work with the present value of the debt. So it’s not as easy as one would imagine. And it applies to those who have one location or 500 locations. If you’re a big corporate or if you’re a small,
owned bakery. If you have a lease over a year it needs to be notated on your financial documents.
Bryana (03:18.762)
Is it gonna be an accountant or like a CPA that’s gonna handle this or?
Jill Coulter (03:23.82)
Well, you know your accountant probably could, but it might not be the best use of that resource. We do this type of bookkeeping for our clients, and it might be a little more cost effective to allow us to help those who need this calculated.
Bryana (03:45.93)
Thank you very much. That cleared up a lot of the confusion I had about what exactly date 42 was.
Jill Coulter (03:53.58)
Well, I’m happy to help and we are very happy to have you as part of our team. Thank you, Brianna.
Bryana (03:58.93)
Thank you, Jill.
