For the year ended December 31, 1994, the Account recognized net unrealized depreciation of investments in unconsolidated joint ventures of approximately $2,362,000. Approximately $217,000, $751,000 and $1,428,000 of unrealized depreciation recognized by the Account was attributable to the Account's investments in the 1225 Connecticut office building, Monmouth Mall and Northridge Mall, respectively, partially offset by a slight amount of unrealized appreciation of approximately $34,000 in the Account's investment in Southridge Mall for the year.
In February 1995, N/S Associates obtained a new mortgage loan secured by Southridge Mall in the principal amount of $35,000,000. The new mortgage loan has a term of seven years, bears interest at 8.35 percent per annum and requires monthly payments of interest only prior to maturity. A portion of the proceeds from the new mortgage loan was used to repay the two mortgage loans secured by
Independent Auditors' Report Balance Sheets, December 31, 1996 and 1995 Statements of Operations, years ended December 31, 1996, 1995 and 1994 Statements of Changes in Contract Owners' Equity, years ended December 31, 1996, 1995 and 1994 Statements of Cash Flows, years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements Participation in Mortgage Loan on Real Estate and Interest Earned on Participation in Mortgage - Schedule III Real Estate Owned and Rental Income - Schedule IV
Investments in Securities Investments in short-term securities maturing more than 60 days from the valuation date are valued at the market price or approximate fair value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. The Account also may invest in intermediate-term bonds with maturities of up to five years which are valued at fair value as determined by reference to market quotations, market indices, matrices and data from independent brokers.
The Account has experienced substantial net contract terminations over the past several years, which have adversely affected its liquidity. In March 1994, the Account obtained a short-term revolving line of credit for up to $10 million from IDS Life to pay for contract surrenders and other obligations under the Contracts. On June 2, 1995, the line of credit was terminated and the Account repaid the outstanding balance under the line of credit with the proceeds from accumulation units purchased by IDS Life. As of December 31, 1996, IDS Life had cumulatively contributed $26,700,000 toward the purchase of accumulation units. IDS
The ventures have implemented Statement of Accounting Standards No. 95 "Statement of Cash Flows" which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The ventures records amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the ventures' policy is to consider all such amounts held with original maturities of three months or less ($12,084,000 and $2,200,000 at December 31, 1996 and 1995, respectively) as cash equivalents with any remaining amounts reflected as short-term investments.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"), "Disclosures about Fair Value of Financial Instruments", requires entities to disclose the SFAS 107 value of all financial assets and liabilities for which it is practicable to estimate. Value is defined in the Statement as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The ventures believe the carrying amount of its assets and liabilities (excluding current portion of long-term debt) approximates SFAS 107 value due to the relatively short maturity of these instruments. There is no quoted market value available for any of the ventures' other instruments. Based upon estimates of current market rates for debt with similar terms, the ventures discounted the scheduled loan payments to maturity. Based upon this calculation, the ventures believe that the carrying value of the mortgage notes payable approximate market value at December 31, 1996 and 1995.