Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 46

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 15
Chunk 46
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 to held for sale on the consolidated balance sheets for all periods presented.Comprehensive Income (Loss)Comprehensive income (loss) for each of the years ended December 31, 2024, 2023 and 2022 was equal to net income (loss) for these respective periods.

F-9

Table of ContentsKBS REAL ESTATE INVESTMENT TRUST III, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)December 31, 20243.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition - Operating LeasesReal EstateThe Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and records amounts expected to be received in later years as deferred rent receivable.  If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company.  When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed.  When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term.  Tenant improvement ownership is determined based on various factors including, but not limited to:•whether the lease stipulates how a tenant improvement allowance may be spent;•whether the lessee or lessor supervises the construction and bears the risk of cost overruns;•whether the amount of a tenant improvement allowance is in excess of market rates;•whether the tenant or landlord retains legal title to the improvements at the end of the lease term;•whether the tenant improvements are unique to the tenant or general purpose in nature; and•whether the tenant improvements are expected to have any residual value at the end of the lease.In accordance with ASU 2016-02, Leases (Topic 842) (“Topic 842”), tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s