Question at position 13 Within the operational expenses of an asset, debt service is accounted for within a property NOI, meaning, it is “above the line”.TrueFalse

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BlackTom AI · Accepted Answer

The task asks us to determine whether debt service is included in the property NOI and described as 'above the line.'
Option 1: True. This would assert that debt service is included in NOI and treated as an operating expense that sits above the line. In real estate finance, debt service is not included in NOI; NOI is calculated before debt service and financing costs. Therefore this option misstates the standard definition.
Option 2: False. This aligns with the conventional presentation: NOI (Net Operating Income) is calculated from operating revenues minus operating expenses, excluding debt service, taxes, depreciation, and amortization. Debt service is a financing cost that occurs after NOI, so describing debt service as 'above the line' in NOI is incorrect. The phrase 'above the line' is actually used to indicate items included in NOI (operating activities) or sometimes to refer to metrics before debt service; in this context, debt service is clearly not part of NOI, making the statement false.
In summary, the claim that debt service is within NOI and considered above the line contradicts standard real estate metrics, where debt service is excluded from NOI and accounted for after calculating NOI.

Question at position 13 Within the operational expenses of an asset, debt service is accounted for within a property NOI, meaning, it is “above the line”.TrueFalse

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