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Variable Interest Entity (VIE) | 12 Months Ended
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Jan. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Variable Interest Entity (VIE) | 5. VARIABLE INTEREST ENTITY (VIE) Management evaluates the Trust’s explicit and implicit variable interests to determine if they have any variable interests in VIEs. Variable interests are contractual, ownership, or other pecuniary interests in an entity whose value changes with changes in the fair value of the entity’s net assets, exclusive of variable interests. Explicit variable interests are those which directly absorb the variability of a VIE and can include contractual interests such as loans or guarantees as well as equity investments. An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing of variability indirectly, such as through related party arrangements or implicit guarantees. The analysis includes consideration of the design of the entity, its organizational structure, including decision making ability over the activities that most significantly impact the VIE’s economic performance. GAAP requires a reporting entity to consolidate a VIE when the reporting entity has a variable interest, or combination of variable interest, that provides it with a controlling financial interest in the VIE. The entity that consolidates a VIE is referred to as the primary beneficiary of that VIE. The Partnership has determined that the Albuquerque entity and the Yuma entity, prior to its sale on October 24, 2018, were variable interest entities with the Partnership as the primary beneficiary with the ability to exercise control, as determined under the guidance of ASC Topic 810-10-25. In its determination, management considered the following qualitative and quantitative factors: a) The Partnership, Trust and their related parties, which share common ownership and management, have guaranteed material financial obligations of the Albuquerque and Yuma entities, including its distribution obligations. b) The Partnership, Trust and their related parties have maintained, as a group, a controlling ownership interest in the Albuquerque entity and Yuma, with the largest ownership belonging to the Partnership. c) The Partnership, Trust and their related parties have maintained control over the decisions which most impact the financial performance of the Albuquerque and Yuma entities, including providing the personnel to operate the property on a daily basis. On February 15, 2017, the Trust and Partnership entered into a restructuring agreement with Rare Earth to allow for the sale of non-controlling partnership units in the Yuma entity for $10,000 per unit. Rare Earth and the Trust are restructuring the Yuma Partnership Interest from General Partner majority-owned to accredited investor majority-owned. Total interests outstanding will remain unchanged at 800 with Class A, Class B and Class C Limited Liability Limited Partnership Interests (referred to collectively as “Interests”) restructured with the Yuma entity purchasing 300 existing IHT Class B Interests and reissuing 300 Class A units to accredited investors as Class A Interests causing the Yuma entity to offer and sell up to approximately 300 Class A (2017 series) Interests. Rare Earth, as a General Partner of the Yuma entity, will coordinate the offering and sale of Class A Interests to qualified third parties. Rare Earth and other Rare Earth affiliates may purchase Interests under the offering. The Trust paid $240,000 as a restructuring fee to Rare Earth during the fiscal year ended January 31, 2018, which was included in equity. During the fiscal years ended January 31, 2020 and January 31, 2019, neither the Trust nor the Partnership have provided any implicit or explicit financial support for which they were not previously contracted. Both the Partnership and the Trust provided mortgage loan guarantees which allow our properties to obtain new financing as needed. The following table includes assets that can only be used to settle the liabilities of Albuquerque Suites Hospitality LLC (Albuquerque Hotel) and the creditors have no recourse to the Trust. These assts and liabilities, with the exception of the investment in a privately held entity and amounts due to affiliate, which are eliminated upon consolidation with the Trust, are included in the accompanying consolidated balance sheets.
|  | January 31, |
|  | 2020 |  |  | 2019 |
Assets |  |  |  |  |  |
Cash |  | $ | 21,359 |  |  | $ | 81,027 |
Accounts Receivable |  |  | 23,355 |  |  |  | 77,956 |
Prepaid Expenses and Deposits |  |  | 19,688 |  |  |  | 12,063 |
Hotel Properties, Net |  |  | 1,641,582 |  |  |  | 1,801,357 |
Operating Lease -Right of Use |  |  | 2,085,984 |  |  |  | - |
Total Assets |  | $ | 3,791,968 |  |  | $ | 1,972,403 |
Liabilities |  |  |  |  |  |  |  |
Accounts Payable |  | $ | 135,165 |  |  | $ | 94,261 |
Accrued Expenses and Other |  |  | 278,071 |  |  |  | 421,814 |
Due to Affiliate |  |  | 15,000 |  |  |  | 1,361,999 |
Operating Lease Liability (ASC 842) |  |  | 2,263,467 |  |  |  |  |
Mortgage Notes Payable |  |  | 1,396,690 |  |  |  |  |
Total Liabilities |  | $ | 4,088,392 |  |  | $ | 1,878,074 |
Equity |  |  | (296,424 | ) |  |  | 94,329 |
Liabilities & Equity |  | $ | 3,791,968 |  |  | $ | 1,972,403 |

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
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