REIT Property Valuation GAAP IFRS

This problem tests whether you understand how accounting standards affect the way real estate assets are carried on the balance sheet and how that flows through to REIT performance metrics. Under U.S. GAAP, real estate is generally accounted for using historical cost, so depreciation is recorded on buildings and must be adjusted when moving from net income to REIT-specific earnings measures. Under IFRS, investment property can be measured using a fair value approach, which changes the timing and presentation of gains and losses and affects how those items are reconciled in valuation metrics. Interviewers ask this because REITs are highly sensitive to accounting treatment, and candidates need to understand how reported earnings can differ from economic performance.