Accounting treatment for land option contracts

I thought I would phrase it another way. Does anyone have any experience with the accounting for land option contracts; ore specifically applying FIN

46 with regards to consolidating variable interest entities? If you have not heard of it, here is a simple scenario:

A farmer (or corp., LLC, developer) wants to sell a piece of land. In order to protect their other assets, they form an LLC (or other legal entity), Lets call it Land, LLC, whose sole asset is the land in question. Builder A comes along and signs an option contract to buy the land. Let?s say the purchase price is $1,000,000 and the put up an earnest money deposit of $70,000. Everything good so far, ok now we go to la la land. The Builder is subject to financial interpretation number 46(R) which is long and complicated, but basically say that the earnest money deposit is considered equity in Land, LLC and the builder has to determine if they are the primary beneficiary of Land, LLC. If they are, the Builder has to consolidate the LLC even though they do not own it and are under no obligation to own it. In most cases, if things go bad, the builder can walk away and only loose their earnest money deposit.

So, I have been working with this issue for a few months and the process keeps evolving. I just wanted to know that someone out there understands my pain.

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Joker
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