Notes to Financial Statements Dollars in thousands, except share and per share amounts and where indicated as in millions or billions We adjust our balance sheets on an ongoing basis to reflect the current fair market value of our derivatives. We record  changes in the fair value of these derivatives each period in earnings or comprehensive income, as appropriate. The ineffective  portion of the hedge is immediately recognized in earnings to the extent that the change in value of a derivative does not  perfectly offset the change in value of the instrument being hedged. The unrealized gains and losses held in accumulated  other comprehensive income will be reclassified to earnings over time as the hedged items are recognized in earnings. We have  a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. We use standard market conventions to determine the fair values of derivative instruments and techniques such as  discounted cash flow analysis, option pricing models, and termination cost are used to determine fair value at each balance  sheet date. All methods of assessing fair value result in a general approximation of value and such value may never actually  be realized. The components of our accumulated comprehensive income consisted of the following as of December 31: Accumulated Comprehensive Income Purchase Accounting Allocation We allocate the purchase price of acquisitions to the various components of the acquisition based upon the relative  value of each component in accordance with SFAS No. 141 “Business Combinations.” These components typically include  buildings, land and intangibles related to in-place leases and we estimate:  We amortize all of these amounts over the remaining average term of the acquired in place leases. We also estimate the  value of tenant or other customer relationships acquired, if any, which are amortized over the term of the related leases and  any expected renewals. Any remaining amount of value will be allocated to in-place leases, as deemed appropriate under the  circumstances. We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account  for our leases as operating leases. We accrue minimum rents on a straight-line basis over the terms of their respective leases.  Substantially all of our retail tenants are also required to pay overage rents based on sales over a stated base amount during  the lease year. We recognize overage rents only when each tenant’s sales exceeds its sales threshold. We structure our leases to allow us to recover a significant portion of our property operating, real estate taxes, repairs and  maintenance, and advertising and promotion expenses from our tenants. Property operating expenses typically include utility,  insurance, security, janitorial, landscaping, food court and other administrative expenses. Our advertising and promotional  costs are expensed as incurred. We accrue reimbursements from tenants for recoverable portions of all these expenses as  revenue in the period the applicable expenditures are incurred. We also receive escrow payments for these reimbursements  54 simon property group, inc. Revenue Recognition ● the fair value of the buildings on an as-if-vacant basis. The value allocated to land is determined either by real  estate tax assessments, a third party or other relevant data. ● the market value of in-place leases based upon our best estimate of current market rents and amortize the  resulting market rent adjustment into revenues.  ● the value of costs to obtain tenants, including tenant allowances and improvements and leasing commissions.  ● the value of revenue and recovery of costs foregone during a reasonable lease-up period, as if the space was  vacant. 2003 2002 Cumulative translation adjustment  $ 1,401 $ (1,592 ) Accumulated derivative gains and (losses), net  10,176  (6,517 ) Net unrealized gains on marketable securities  1,009  – Total accumulated comprehensive income (loss) $ 12,586 $ (8,109 )