FORM 20-F/A Brookfield Property Partners L.P. - Brookfield Asset ...

the associated lease and any contractual bargain renewal options to the tenant and in place at the time ofpurchase. The value associated with tenant relationships is amortized into depreciation and amortizationexpense over the expected term of the relationship, which includes an estimate of probability of the leaserenewal, and its estimated term. If a tenant vacates its space prior to the contractual termination of the leaseand no rental payments are to be made on the lease, any unamortized balance of the related intangible willbe written off to amortization expense. Tenant improvements, in-place lease value and lease originationcosts are amortized as an expense over the remaining life of the lease (or charged against earnings if thelease is terminated prior to its contractual expiration date).Properties under development consist of rental properties under construction and are recorded at cost,reduced for impairment losses where appropriate. Properties are classified as under development until theproperty is substantially completed and available for occupancy, at which time such properties are classifiedas rental properties and depreciation commences. The cost of properties under development includes costsincurred in connection with their acquisition, development and construction. Such costs consist of all directcosts including capitalized interest on general and specific debt and other direct expenses. Ancillary incomerelating specifically to such properties during the development period is treated as a reduction of costs.If events or circumstances indicate that the carrying value of a rental property, a rental property underdevelopment, or a property held for development may be impaired, a recoverability analysis is performedbased on estimated undiscounted future cash flows to be generated from property operations and itsprojected disposition. If the analysis indicates that the carrying value is not recoverable from such futurecash flows, the property is written down to estimated fair value and an impairment loss is recognized.In accordance with Accounting Standards Codification (“ASC”) Subtopic 360-10-15, Property, Plant andEquipment, properties formerly held for disposition are carried at the lower of their carrying values (i.e.,cost less accumulated depreciation and any impairment loss recognized, where applicable) or estimated fairvalues less costs to sell. Estimated fair value is determined based on management’s estimate of amounts thatwould be realized if the property were offered for sale in the ordinary course of business assuming areasonable sales period and under normal market conditions. Carrying values are reassessed at each balancesheet date. Implicit in management’s assessment of fair values are estimates of future rental and otherincome levels for the properties and their estimated disposal dates. Due to the significant uncertainty indetermining fair value, actual proceeds realized on the ultimate sale of these properties will differ fromestimates and such differences could be material. Depreciation ceases once a property is classified as heldfor disposition.Revenue Recognition — The Company has retained substantially all of the benefits and risks of ownershipof its rental properties and, therefore, accounts for leases with its tenants as operating leases. Revenuesinclude minimum rents and recoveries of operating expenses and property taxes. Recoveries of operatingexpenses and property taxes are recognized in the period the expenses are incurred.The Company reports minimum rental revenue on a straight-line basis, whereby the known amount of cashto be received under a lease is recognized in income evenly over the term of the respective lease.Differences between rental revenue and minimum rents collected in accordance with the lease agreementsare recorded as deferred rent receivables. The impact of the straight-line adjustment increased rental revenueby approximately $19,711, $24,450, and $27,819 for the years ended December 31, 2011, 2010, and 2009respectively.Certain tenants are required to pay overage rents based on sales over a stated base amount during the leaseyear. The Company recognizes overage rents only when each tenant’s actual sales exceed the stated baseamount.Parking and other revenue includes income from public parking spaces, parking spaces leased to tenants,income from tenants for additional services provided by the Company and income from tenants for earlylease termination.F-80