Company: GLPI
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0001575965-25-000008
Chunk: 141

Company: Gaming & Leisure Properties, Inc.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 8
Chunk 141
---
 basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Lease Classification - See Note 12 to the Consolidated Financial Statements

Critical Audit Matter Description

The Company performs a lease classification test upon the entry into any new tenant lease or amendment or modification of an existing tenant lease to determine if the lease will be accounted for as an operating lease, sales-type lease, or direct financing lease. The accounting guidance under ASC 842 is complex and requires the use of judgements and assumptions by management to determine the proper accounting treatment of a lease. The lease classification tests require subjective judgments, such as the fair value of the underlying leased assets, the residual value of the assets at the end of the lease term and determining the likelihood a tenant will exercise renewal options in order to determine the lease term. 

69

Table of Contents

Given the significant judgements made by management to determine the lease classification, we performed audit procedures to assess the reasonableness of such judgments, which required a high degree of auditor judgment.  

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the judgements surrounding the determination of the inputs and assumptions used in the lease classification test for any new, modified, or amended lease included the following, among others: 

•We tested the design and operating effectiveness of relevant controls, including management’s review and approval of the underlying key inputs and assumptions.

•We evaluated the significant judgements and assumptions made by management in determining the lease classification by:

◦Engaging fair value specialists to evaluate the reasonableness of management's valuation and allocation methodology and related inputs and assumptions to determine fair value, residual value of the leased assets and purchase price allocation of the assets acquired.