HomeMy WebLinkAboutThe Colony Apartments Audit1
I
THE COLONY APARTMENTS
SCHEDULE OF OPERATING
REVENUE AND CERTAIN EXPENSES
' FOR THE YEAR ENDED
MAY 31, 1994
1700 Pacific Avenue, Suite 1400 Telephone 214 922 8040
Dallas, Texas 75201-4698
Price Waterhouse 0
Report of Independent Accountants
To the Partners of
Rosseo Holdings Incorporated
We have audited the accompanying schedule of operating revenue and certain expenses
of the Colony Apartments (the "Property") for the year ended May 31, 1994. This
schedule is the responsibility of the Property's management. Our responsibility is to
express an opinion on this schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the schedule of operating revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the schedule. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall schedule presentation. We believe that our audit provides a reasonable basis for
our opinion.
The accompanying schedule of operating revenue and certain expenses was prepared on
the basis described in Note 1 and is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, the schedule of operating revenue and certain expenses audited by us
presents fairly, in all material respects, the operating revenue and certain expenses of the
Colony Apartments, on the basis described in Note 1, for the year ended May 31, 1994,
in conformity with generally accepted accounting principles.
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July 7, 1994
THE COLONY APARTMENTS
SCHEDULE OF OPERATING REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED MAY 31, 1994
Operating revenue:
Rent, net of discounts and allowances S 1,054,689
Other revenue 20,772
1,075,461
Certain expenses (Note 1):
Payroll
110,263
General and administrative
44,977
Energy costs
101,658
Real estate taxes and insurance
108,098
Property operations
116,378
Make ready
18,070
Management fees
25,859
535,303
Operating revenue in excess of
certain expenses
S 540,158
The accompanying notes are an
integral part of this schedule.
THE COLONY APARTMENTS
MAY 31, 1994
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying schedule of operating revenue and certain expenses relates to the operations
of the Colony Apartments (the "Property" or "Apartments") located in College Station, Texas.
The Property is currently owned by Rossco Holdings, Incorporated ("Rossco"). The Property was
constructed in 1975, consisting of 200 units. Rossco has initiated proceedings which may
ultimately culminate in the Texas Dormitory Finance Authority Inc. holding the debt for the
Property.
Basis of presentation
Certain expenses which may not be comparable to the expenses expected to be incurred in the
proposed future operations of the Property have been excluded under the assumption that the
potential transaction described above will be consummated. Expenses excluded consist of
depreciation of the building and improvements, interest expense on certain debt incurred by
Rossco to acquire and develop the property, and amortization of expenses not directly related
to the proposed future operations of the Property.
Revenue and expense recognition
The accompanying schedule of operating revenue and certain expenses has been prepared on
the accrual basis of accounting. Leases are operating and are generally for terms of nine to
twenty four months.
Revenue related to the dorm leases is recognized over the term of the lease. All other revenue
is recognized when received.
2. RELATED PARTY TRANSACTIONS
For the year ended May 31, 1994, the Colony Apartments incurred $25,859 in charges from
related parties for fees related to the management of the Property.
3. FUTURE MINIMUM RENTALS UNDER OPERATING LEASES
As of July 7, 1994, the future minimum lease rental revenue under the terms of noncancelable
leases are as follows:
1995 $ 613,803
1996 69,123
$ 682,926
No leases have been signed for any periods beginning after May 31, 1996.
THE COLONY APARTMENTS
MAY 31, 1994
4. COMMITMENTS AND CONTINGENCIES
The apartment leases certain equipment under operating leases. Future minimum lease
commitments are as follows:
1995 S 11,532
1996 9,335
1997 6,668
1998 2,400
1999 and thereafter 1,000
8 30,935