Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies

(3)	Summary of Significant Accounting Policies

(a)	Basis of Accounting and Consolidation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting and include the accounts of the Partnership and its subsidiary, Realmark/Foxhunt Limited Partnership, a dormant company. The Partnership owns Northwind Office Park.

In consolidation, all intercompany accounts and transactions have been eliminated.

(b)

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

(c)	Receivables and Bad Debt

The Partnership uses the allowance method for uncollectible accounts. Charges to this account are made on a case-by-case basis. Increases or decreases to the allowance are charged to bad debt expense. For the years ended December 31, 2013 and 2012, bad debt expense was $0 and $4,290, respectively. The allowance for doubtful accounts at December 31, 2013 and 2012 was $0 and $77,045, respectively.

(d)	Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, from 5 to 25 years. Significant improvements are capitalized, while expenditures for maintenance, repairs and replacements are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation and gains and losses are reflected in the consolidated statements of operations.

The Partnership reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In determining whether there is an impairment of long-lived assets, the Partnership compares the sum of the expected future net cash flows (undiscounted and without interest charges) to the carrying amount of the assets. At December 31, 2013 and 2012, no impairment in value has been recognized.

(e)	Concentrations of Credit Risk

Financial instruments that potentially subject the Partnership to concentrations of credit risk consist principally of cash and cash equivalent accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institution.

(f)	Unconsolidated Joint Ventures

The Partnership’s investment in Research Triangle Industrial Park Joint Venture and Research Triangle Land Joint Venture are unconsolidated joint ventures, which are accounted for on the equity method. These joint ventures are not consolidated in the Partnership’s financial statements because the Partnership is not the controlling owner.

(g)	Rental Income

Rental income is recognized as earned according to the terms of the leases. Commercial leases are generally for periods of one to five years. Delinquent residential property rent is not recorded.


(h)	Per Unit Data

Per limited partnership unit is based on the weighted average number of limited partnership units outstanding for the year. There are no potentially dilutive instruments outstanding.

(i)	Fair Value of Financial Instruments

Due to the short-term nature and interest rates that approximate market rates, the fair value of the Partnership’s financial instruments approximated their carrying values at December 31, 2013 and 2012.

(j)	Income Allocation and Distributable Cash Flow

The partnership agreement provides that income not arising from sale and refinancing activities and all partnership losses are to be allocated 97% to the limited partners and 3% to the general partners. Partnership income arising from sale or refinancing activities is allocated in the same proportion as distributions of distributable cash from sale proceeds. In the event there is no distributable cash from sale proceeds, taxable income will be allocated 87% to the limited partners and 13% to the general partners. The above is subject to tax laws that were applicable at the time of the formation of the Partnership and may be adjusted due to subsequent changes in the Internal Revenue Code.

The partnership agreement also provides for the distribution to the partners of net cash flow from operations. Sale or refinancing proceeds are distributed to the extent available, 100% to the limited partners until there has been a return of the limited partner’s capital contribution plus an amount sufficient to provide a 7%, not compounded, return on their adjusted capital contributions for all years following the termination of the offering of the units. It is anticipated that there will be sufficient cash flow from the sale of the Partnership’s remaining properties to provide this return to the limited partners. There were no distributions to partners made in 2012 and 2013.

(k)	Income Taxes

As a limited partnership, the Company's taxable income or loss is allocated to members in accordance with their respective percentage ownership. Therefore, no provision or liability for income taxes has been included in the financial statements.

Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Company and recognize a tax liability if the Company has taken an uncertain position that more likely than not would not be sustained upon examination by taxing authorities. Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal, state, or local tax authorities for years before 2010.

(l)	Segment Information

The Partnership’s operating segments all involve the ownership and operation of income-producing real property and are aggregated into one reporting segment.

(m)	Reclassifications

Certain 2012 amounts have been reclassified to reflect a consistent presentation with 2013. This change had no effect on previously reported net loss.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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REALMARK PROPERTY INVESTORS LTD PARTNERSHIP II 10-K/A