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Posted by Jerry Gitomer on February 7, 2007, 10:08 pm
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studylogic06@yahoo.com wrote:
> Consider a hypothetical commercial real estate property.
>
> The land, building, improvements, and rights to use them represent
> 'real property'
>
> The inventory, desks, chairs, and other assets on the property not
> permanently attached are 'personal property' (of either the landlord
> or the tenant).
>
> So far so good.
>
> Now let's consider a hypothetical 'Assets' accounting ledger.
>
> Working up from the longer term assets to the shorter term assets...
> various rights, intangibles, and intellectual property assets I think
> can be considered 'real property'... land and buidlings in the asset
> ledger are considered 'real property'... equipment, office supplies,
> and other such assets can be considered 'personal property'... but
> what of cash and cash-like equivs? Is cash 'real property' or
> 'personal property'? Seems odd to call cash 'real property', but if
> you think about it, that cash received from rents is a tangible
> liquification of the intangible rights to use that 'real property'
> space for that month. On the other hand, my cash account may contain
> cash from the sale of 'personal property' assets such as inventory for
> a retailer or 'personal property' equip from a service business or
> landlord. When a lawyer deposits a check in payment for professional
> services, did he get paid for real or personal property?
>
> And so is cash 'real' or 'personal' property? Neither? Both? Some
> third category? Does it depend on the source?
>
> Cash (such as your checking account or T-bills) is certainly part of
> the overall value of a commercial entity/operation.... but if we start
> with the assumption that a commercial asset's total value is the sum
> of its 'real property' value and its 'personal property' value, what
> category is the cash a part of?
>
Real property vs personal property is a legal concept rather
than an accounting concept. Only land and buildings are
considered real property.
Given that assets fall into one of the two categories: personal
or real anything other than land and buildings -- including cash
-- is personal property.
HTH
Jerry
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