CNS AR24 Digital - Book - Page 73
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS4(Continued)
From time to time, the Company, including the consolidated funds, may enter into forward foreign exchange contracts
to economically hedge currency exposure, and derivative contracts, including options, futures and swaps contracts, to gain
exposure to the underlying commodities markets or to economically hedge market risk of the underlying portfolios.
Leases4The Company determines if an arrangement is a lease at inception. The Company has operating leases for
corporate offices and certain information technology equipment which are included in operating lease right-of-use (ROU)
assets and operating lease liabilities on the Company9s consolidated statements of financial condition.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent obligations to
make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at
commencement date based on the net present value of lease payments over the life of the lease and thereafter, are remeasured
if there is a change in lease terms. The majority of the Company9s lease agreements do not provide an implicit rate. As a
result, the Company uses an estimated incremental borrowing rate based on the information available as of the applicable
lease commencement date in determining the present value of lease payments. The operating lease ROU assets reflect any
upfront lease payments made as well as lease incentives received.
The lease terms may include options to extend or terminate the lease and these are factored into the determination of
the ROU asset and lease liability at lease inception when and if it is reasonably certain that the Company will exercise that
option. Lease expense for fixed lease payments is recognized on a straight-line basis over the lease term.
The Company has certain lease agreements with non-lease components such as maintenance and executory costs,
which are accounted for separately and not included in ROU assets.
ROU assets are tested for impairment whenever changes in facts or circumstances indicate that the carrying amount of
an asset may not be recoverable. Modification of a lease term would result in remeasurement of the lease liability and a
corresponding adjustment to the ROU asset.
Noncontrolling Interests4Noncontrolling interests consist of nonredeemable and redeemable third-party interests in
the Company's consolidated funds. Noncontrolling interests that are not redeemable at the option of the investors are
classified as nonredeemable noncontrolling interests and are included in stockholders9 equity. Noncontrolling interests that
are redeemable at the option of the investors are classified as redeemable noncontrolling interests and are not treated as
permanent equity. Noncontrolling interests are recorded at fair value which approximates the net asset value at each reporting
date.
Investment Advisory and Administration Fees4The Company earns revenue by providing asset management services
to institutional accounts, open-end and closed-end funds as well as model-based portfolios. Investment advisory fees are
earned pursuant to the terms of investment management agreements and are generally based on a contractual fee rate applied
to the average assets under management. The Company also earns administration fees from certain open-end and closed-end
funds pursuant to the terms of underlying administration contracts. Administration fees are based on the average daily assets
under management of such funds. Investment advisory and administration fee revenue is recognized when earned and is
recorded net of any fund reimbursements. The investment advisory and administration contracts each include a single
performance obligation as the services provided are not separately identifiable and are accounted for as a series satisfied over
time using a time-based method (days elapsed). Additionally, investment advisory and administration fees represent variable
consideration, as fees are based on average assets under management which fluctuate daily.
In certain instances, the Company may earn performance fees when specified performance hurdles are met during the
performance period. Performance fees are forms of variable consideration and are not recognized until it becomes probable
that there will not be a significant reversal of the cumulative revenue recognized.
Distribution and Service Fee Revenue4Distribution and service fee revenue is based on the average daily net assets of
certain share classes of U.S. open-end funds. Distribution and service fee revenue is earned daily and is recorded gross of any
third-party distribution and service fee expense for applicable share classes.
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