Page 36 - RFCUNY-2010AnnualReport

(f) Rental Revenue Recognition

Base rent income relating to the LLC is recognized on a straight-line basis, rather than in accordance with lease payment schedules, for purposes of recognizing a constant annual rental income. Scheduled base rent increases and the effects of rent abatements are spread evenly over the terms of the respective leases. Differences between the straight-line rents recorded and the amounts actually received are included in deferred rent receivable. Allowances are provided for uncollectible amounts. (g) Rental Property

Building and building improvements of the LLC are carried at cost and are depreciated, using the straight-line method, over their estimated useful lives of 39 years or the life of the improvements, whichever is shorter. Significant renovations or improvements, which extend the economic life of the Property, are capitalized. Expenditures for maintenance and repairs are expensed as incurred.

The LLC reviews the carrying amount of the Property for impairment whenever events or changes in circum stances indicate that the carrying amount of an asset may not be recoverable. No impairment adjustments have been made as a result of this review process during 2010 or 2009. (h) Fixed Assets

Furniture, fixtures, and equipment and leasehold improvements are stated at cost. Depreciation of furniture, fixtures, and equipment is computed on a straight-line basis, over the estimated useful lives of the assets, ranging from five to seven years. Amor tization of leasehold improvements is computed on a straight-line basis, over the estimated useful lives of the assets, not to exceed the remaining life of the lease.

Equipment purchased by the Foundation on behalf of various units of the University from grant and con-tract funds is to be used in the project for which it was purchased and is not included in the Foundation’s fixed assets on the accompanying consolidated bal-ance sheets.

(i) Purchase Accounting for Acquisition of Real Estate The fair value of the LLC’s acquired rental property was allocated to the acquired tangible assets, con sisting of land and building; and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases, and value of tenant relationships, based in each case on their fair values. Above-market and below-market leases were recorded as assets and liabilities, respectively, and

amortized as direct charges against rental revenues over the noncancelable periods of the respective leases. The value of in-place leases is amortized to expense over the remaining noncancelable periods of the respective leases.

The weighted average amortization period for value of above-market leases, below-market leases, and in-place leases is approximately five years. (j) Deferred Costs

Deferred leasing costs, included in deferred costs, represent costs incurred in the successful negotiation of leases, including legal and brokerage fees. These costs are amortized on a straight-line basis over the terms of the related tenant lease.

Deferred financing costs, included in deferred costs, were incurred in obtaining long-term financing for the LLC. Such costs are being amortized on a straight- line basis over the term of the related debt and are recorded as a component of interest expense. (k) Restricted Cash

Restricted cash of the LLC includes amounts to be funded for tenant improvements, replacements and repairs, and leasing commissions as required by the LLC’s loan agreement. Restricted cash also includes tenant security deposits held in accordance with ten-ant leases and other tenant deposits held for improve-ments to leased space. Restricted cash relating to the LLC’s loan agreement and tenant security deposits was $3,069,026 and $2,952,026 at June 30, 2010 and 2009, respectively.

(l) Deposits Held in Custody for CUNY Colleges Deposits held in custody for CUNY colleges reflect those resources held on behalf of the individual col-leges of the University. These deposits are credited with facilities and administrative cost, released time, summer salary recoveries, and interest income for the respective colleges.

Released time recoveries represent personal service costs for individuals on the various colleges’ payrolls who report effort under grants or contracts. When colleges replace an individual providing time and effort to sponsored projects, the Foundation processes pay-roll for these individuals or the school will process the payroll and the Foundation will reimburse the school. The reimbursement of personal service costs is reflected as deductions of deposits held in custody for CUNY.

Facilities and administrative costs are considered recoveries of the specific colleges and, accordingly, are credited to deposits held in custody for CUNY colleges.