Company: GIPRW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000950170-25-046959
Chunk: 83

Company: GENERATION INCOME PROPERTIES, INC.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1B
Chunk 83
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 following accounting estimates to be critical as they involve our more significant judgments and a significant level of estimation uncertainty. These critical accounting estimates are important for understanding and evaluating our reported financial results and financial condition and are reasonably likely to have a material impact on our future results of operations and financial condition. The judgments we make in selecting the estimation methods and significant assumptions, and their inherent estimation uncertainty, affect the reported amounts of assets and liabilities, and our disclosure of contingent assets and liabilities, as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimation methods or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies in our business may utilize different estimates that may impact the comparability of our results of operations and financial condition to theirs.

Impairment Assessment on Investments in Real Estate 

Acquisitions of real estate are recorded at cost. The Company assigns the purchase price of real estate to tangible and intangible assets and liabilities based on fair value. Tangible assets consist of land, buildings, site improvements and tenant improvements.  

Should events or a change in circumstances indicate that the carrying amount of an asset may not be recoverable and potential impairment losses may be necessary, management performs the following procedures: 

•Perform a recoverability test utilizing the undiscounted future cash flows of the property over the anticipated holding period to determine if the carrying value of the asset is recoverable. 

•Perform a fair value analysis if future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property.

•Record a provision for impairment reducing the book value to estimated fair value, to the proportion that the estimated fair value is less than the current book value. 

Key inputs that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures, and property sales capitalization rates. If a property is held for sale, it is carried at the lower of carrying cost or estimated fair value, less estimated cost to sell. 

The Company did not record any impairments on its investments in real estate for the two years included in our consolidated financial statements. The Company performed, timely, the first two steps of the impairment assessment outlined above: analysis of impairment indicators and undiscounted cash flows for properties with impairment indicators.

Purchase Price Allocations

During real estate acquisitions, management makes significant assumptions in determining the fair value of assets acquired and liabilities assumed. We typically allocate the cost of real estate