01—Abstract
Summary
Summary of the 10-K/A filed August 26, 1996. Cited figures are marked; the original filing is the authoritative source.
This filing is not a full annual report.
It is Amendment No. 1 to Equity Residential Properties Trust's Form 10-K for the year ended December 31, 1995, filed August 26, 1996. Its sole purpose is to restate Note 4(a), the rental property accounting policy, in its entirety. The filing contains no balance sheet, income statement, cash flow statement, or operating metrics, so it cannot be used to assess the company's financial performance, leverage, or valuation.
The restated policy clarifies how the company handles impairment. Rental properties held for operation are tested for impairment when events or changes in circumstances suggest the carrying amount may not be recoverable, using undiscounted expected cash flows. Any impairment is measured as the excess of carrying amount over estimated fair value.
Properties held for disposal are carried at the lower of carrying amount or fair value less costs to sell, with impairment recognized once a sale commitment exists or active marketing begins. The policy also sets a 30-year straight-line depreciation life for buildings and land improvements and up to seven years for furniture, fixtures and equipment, and states that maintenance is expensed while significant improvements are capitalized. The filing includes the Grant Thornton L.L.P. audit opinion (Chicago, dated February 14, 1996, with Note 20 dated March 14, 1996), which states the financial statements present fairly in all material respects.
It is signed by Michael J. McHugh, Senior Vice President, Chief Accounting Officer and Treasurer.
For investors, the amendment is primarily a disclosure clarification rather than a report of new results. The original 10-K should be consulted for financial data.
02—Key points
Key Highlights
- This is Amendment No. 1 to the 1995 Form 10-K, filed August 26, 1996, and it amends only Part IV, Item 14.
- The only substantive change is a full restatement of Note 4(a), Rental Property accounting policy, which is the focus of the amendment.
- The restated policy adds detailed impairment testing: undiscounted cash flow recoverability tests for held properties and fair value less costs to sell for properties held for disposal.
- Depreciation is straight-line over 30 years for buildings and land improvements and up to seven years for furniture, fixtures and equipment.
- Ordinary maintenance and repairs are expensed as incurred, while significant renovations that extend asset life are capitalized; initial direct leasing costs are expensed as incurred.
- Grant Thornton L.L.P. issued an unqualified opinion on the financial statements for 1995, 1994 and 1993, covering the consolidated company and its predecessor business.
- The filing contains no financial statement figures, so it provides no quantitative data on revenue, net income, debt, or property portfolio.
03—Questions
Frequently Asked Questions
Why did Equity Residential file this amendment?
The amendment restates Note 4(a) of the 1995 financial statements in its entirety to present the rental property accounting policy with more detailed impairment and disposition language. The filing does not explain the specific reason for the revision.
Does this filing show the company's 1995 financial results?
No. The document includes only the amended accounting policy note, the auditor's report, and the signature page. Revenue, net income, balance sheet, and cash flow figures must be taken from the original 1995 Form 10-K.
How does the company test rental properties for impairment?
For properties held for long-term operation, the company reviews them when events or changes in circumstances suggest the carrying amount may not be recoverable. It compares undiscounted expected future cash flows with the carrying amount and, if the carrying amount is higher, recognizes an impairment loss equal to the excess over fair value. For properties to be sold, impairment is recognized when fair value less cost to sell falls below carrying amount, measured once a sale commitment exists or active marketing has begun.
What depreciation and expense policies apply to the company's properties?
Depreciation is straight-line over 30 years for buildings and land improvements and up to seven years for furniture, fixtures and equipment. Ordinary maintenance and repairs are expensed as incurred, significant improvements that extend asset life are capitalized, and initial direct leasing costs are expensed as incurred.
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