Complimentary Course for Financial Executives on Implications of New Lease Accounting Changes on Corporate Real Estate

1. Corporate Real Estate & IAS 17 An analysis of the impact of corporate real estate on the corporate financial statements under IAS 17 © 2011 Cambridge Consulting Group Inc.

18. 5 Year Lease Under IAS 17 © 2011 Cambridge Consulting Group Inc. Assumptions: 5 Year Lease, 10,000 SF, $14.40/PSF Annual, 7.5% Borrowing Rate Current Method New Method Rent Expense Depreciation Interest Total Difference % Diff. Year 1 144,000 120,521 40,227 160,748 16,748 12% Year 2 144,000 120,521 32,460 152,981 8,981 6% Year 3 144,000 120,521 24,112 144,633 633 0% Year 4 144,000 120,521 15,139 135,660 (8,340) -6% Year 5 144,000 120,521 5,455 125,976 (18,024) -13% Totals 720,000 602,607 117,393 720,000

19. 10 Year Lease Under IAS 17 © 2011 Cambridge Consulting Group Inc. Assumptions: 10 Year Lease, 10,000 sf., $14.40/PSF Annual, 7.5% Borrowing Rate Current Method New Method Rent Expense Depreciation Interest Total Difference % Diff. Year 1 144,000 101,726 72,477 174,203 30,203 21% Year 2 144,000 101,726 67,033 168,759 24,759 17% Year 3 144,000 101,726 61,174 162,900 18,900 13% Year 4 144,000 101,726 54,869 156,595 12,595 9% Year 5 144,000 101,726 48,085 149,811 5,811 4% Year 6 144,000 101,726 40,783 142,509 (1,491) -1% Year 7 144,000 101,726 32,926 134,652 (9,348) -6% Year 8 144,000 101,726 24,471 126,197 (17,803) -12% Year 9 144,000 101,726 15,373 117,099 (26,901) -19% Year 10 144,000 101,726 5,553 107,279 (36,721) -26% Totals 1,440,000 1,017,260 422,744 1,440,000

20. Operating vs. Capitalized Recognition 10 Year Lease © 2011 Cambridge Consulting Group Inc. Break-Even Date

24. Subleasing Under IAS 17 New Lease Basis A Sublease Increases the Lease Basis - An Additional Asset and Liability © 2011 Cambridge Consulting Group Inc.

29. Balancing the Books Assets Liabilities Equity © 2011 Cambridge Consulting Group Inc.

35. Straight-Line versus Accelerated Depreciation How Net Asset Value Declines over Time Straight-Line Depreciation Accelerated Depreciation Time Net Asset Value © 2011 Cambridge Consulting Group Inc.

37. Is there enough money to pay me on time? Owners Current Employees Managers Suppliers Lenders Prospective Employees Attorneys and Litigants Customers Can they pay me back? Am I getting a return on my investment? Will they be in business tomorrow? Am I running the company efficiently? Is the company worth suing? Does this company have a future? Can the company afford to pay me more? Who Uses Financial Statements and What Do They Look For? © 2011 Cambridge Consulting Group Inc.

42. Example of a Balance Sheet © 2011 Cambridge Consulting Group Inc.

44. Income Statement Example © 2011 Cambridge Consulting Group Inc.

46. Cash Flow Statement Example © 2011 Cambridge Consulting Group Inc.

47. Balance Sheet as of December 31, 2010 Balance Sheet as of December 31, 2011 Income Statement from January 2010 to December 31, 2011 FULL YEAR 2011 Cash Flow Statement from January 2010, to December 31, 2011 Relationship of Balance Sheet, Income Statement, and Cash Flow Statement © 2011 Cambridge Consulting Group Inc.

63. Operating vs. Capitalized Recognition 5 Year Lease Break-even is in 2.5 Years