Temple University Japan: Where is the rent? (Part II)

Picking up from yesterday, let’s look at the long screen shot of “Note O” in this report. On yesterday’s screen shot, I was emphasizing the expense number of $24,456,000, so that is why you see it circled. We are led to believe that the $25 million in revenue, less that $24.4 million expense, is making Temple Japan a breakeven operation.

Now, remember yesterday I was saying about how this presentation makes Temple Japan, known as “Temple Educational Support Services”, look like a breakeven operation. But the problem is: how do they account for the rent that the Tokyo landlord charges for the Azabu Juban facilities? In terms of an expense, there aren’t many places where that can go. Is it being classified as “Educational and General”? If so, that means overall Temple’s educational and general expense, the $810,025,000 from yesterday’s post, is inaccurate. Rent is “Plant, Property & Equipment”, which is abbreviated as “PP&E”.

So let’s look at the screen shot again, and I highlight where something concerning “PP&E” would go:

You’d see something about it in one of those rectangular boxes. But notice how they’re empty. What this suggests is that there was no change in PP&E, except for the disposal of some equipment with a loss of $13,000 attached to it.

Now, if Temple University Japan actually owned the Azabu Juban campus, then in fact you might not see any change to PP&E. It would be, like I said yesterday, a Balance Sheet item, not an item for the Income Statement. When you own your own house, you don’t consider your use of your own house as an expense, right? (That is, you don’t pay yourself rent.)

Temple Japan doesn’t own the Azabu Juban property, so a Tokyo landlord is getting a payment. But where does that show in the long screen shot?

It’s just these blank spaces. Most anything having to do with PP&E is blank.