between the carrying amounts of investment property at the beginning and end of IAS 40 Investment Property is one of them. I decided to use IFRSs and apply fair value model for investment property. The difference 2 was recognised as revaluation reserve. I really admire your way of teaching and presentation. An entity that holds an investment It depends what services are attached to these properties, but in most cases yes. If you are a lessee and you are using the office for your admin purposes – NO. What if both portions are significant but cannot be sold or leased out separately, how should it be accounted? Is it compulsory to go for independent valuation under cost model as it gives only disclosure in the FS or management valuation is acceptable? IAS 40 Investment Property prescribes the accounting treatment and disclosure with respect to investment property. A Vehicle rental company : How will it recognize its motor vehicles?? Hope you answer soon!! I have been faced with a transaction recently where the net amt was taken to the books, hence the query. In Property, plant and equipment,, defines as tangible items that: criteria to be classified as held for sale (or are included in a disposal group for repairs, maintenance or enhancements.Fair value model Very useful resource material. Really an amazing job, and than you for what you are doing!! Hi Silvia, Can this whole land be classified as joint use property or can I say the head office is ppe-owner occupied and the other 2 are Investment property…please help. inventories to investment property that will be carried at fair value, any it depends on what services hotel provides to its occupants. Later after few months we gave that manufacturing unit on lease with a one year lease agreement on renewable basis. model(a) the depreciation methods used;(b) the useful lives Dear Silvia The researcher aims to do a comparison between a firm that makes use of IAS 40 and one that doesn't… Download full paper File format:.doc, available for editing If you do not revalue to FV at the end of the reporting date, but you keep it in the older fair value, then your investment property might NOT be at fair value at the reporting date. And if yes according to what basis? use. – ‘for rental to others’ mentioned in IAS 16 definition of PPE will become applicable? To measure your investment property using, You start renting out the property that you previously used as your headquarters (transfer to investment property from owner-occupied property under IAS 16), You stop renting out the building and start using it for yourself. If you state the reference along with your explanation, it will be great for us to refer in case if we require more detail explanation. We have building, which is rented, but last month it was decided to sell it during upcoming 12 months. So, will in the separate financial statement, parent will classify that building as “Investment Property” and “Property Plant and Equipment” in consolidated financial statement. in profit or loss (unless IAS 17 requires otherwise on a sale and leaseback) in Your usually response is needed. I have one question where I did not find an answer neither in the standard nor in interpretation. How often should an investment property be revalued? So you can apply diminishing balance, or any other systematic methods that would reflect the usage of the property. disposal.Gains or losses arising from the retirement or disposal of This Standard deals with the accounting treatment of investment propertyand provides guidance for the related disclosure requirements. This is why the International Accounting Standard 2 was issued and interpreted in a detailed way. Be the first to review “IAS 40… 2. investment property? What is the logic behind ? The earlier version of IAS 40, paragraph 38 provided that “The fair value of investment property shall reflect market conditions at the end of the reporting period”. disposal proceeds and the carrying amount of the asset and shall be recognised If an entity Please watch the following video with a summary of IAS 40 Investment property: report "Top 7 IFRS Mistakes" + free IFRS mini-course. I have a query: If a bank held a prperty from defaulted customer with intention to sell it in order to collect the amount of defaulted debt, what is the applicable IFRS for accounting for this property? Would this trigger a reclassification from IP to inventories (IFRS 5 is not relevant as the property is not available for immediate sale in its current condition)? Hi Mohammed, both vehicles need to be recognized under IAS 16. (a) choose either the fair value model or the cost model for all investment my concern is do we need to separate the value of the land since part of it is rented to foreign company and part of it is leased back to my client? thanks. For example if entity has only one building “business center” and all of the business offices in the “business center” are for rent, as this is the business model of the entity. Please check your inbox to confirm your subscription. valuation obtained and the adjusted valuation included in the financial EXCEPT Some of the positive aspects related to IAS 16 are: statements, showing separately the aggregate amount of any recognised lease Could you please help me rectify this !!!!! Or this is a change in accounting policies and retrospective adjustment needs to be made? as its accounting policy either the fair value model or the cost model and shall 2) Lets say an investment holding company owns an apartment building and some units are unsold, are these units under inventories and the accounting treatment must be in accordance to IAS 2? currency, and on translation of a foreign operation into them presentation Hi Silvia, if i have a chillers on my investment properties (Building) which was included when purchased the property, however if the chillier is require to be changed, the new cost of the chillers whether it should be capitalized and depreciate over its life or should be an addition amount to the investment properties? My company owns a number of undeveloped plots of land recognised as Investment property (IAS40). Hi Hc, if you hold your investment property at fair value model under IAS 40, then IFRS 5 does not apply – you continue to apply IAS 40. Must I state there is a change in initial cost of the building? Thanks. you don’t know yet what you’ll use it for). should we record it at its initial cost? Is there another method of depreciating an investment property aside from the straight-line method. My question is…when we switch from cost model to fair value model, should we adjust all difference in retained earnings as this consider to be change in accounting policy or first impairment should be adjusted and routed through PL before transferring to retained earnings because in past impairment loss debited to PL so ideally the same should be reversed in PL only. Again I have concern as our company is in the process of converging from Local GAAP to IFRS. Looks odd at first instance but logical at same time. Thanks, We are an infrastructure business that has both investment property and property for the production of goods or services. But how should we treat it in subsequent years? A furnished apartment which includes furniture and fixtures etc) which is classified under ias 40 should be depreciated or not, as these fixed assests will have wear and tear with the passage of time and have a limited useful life, unlike building itself. a company bought a land and measure it at fair value as investment property,after years, the company decided to erect a building on the land to be used also as investment property. If there is a switch from cost model to fair value model, could you please advise how to deal with the fair value gain or loss? applies the fair value model in paragraphs 33–55 shall disclose a reconciliation You can derecognize your investment property in two circumstances (IAS 40.66): You need to calculate gain or loss on disposal (IAS 40.69) as a difference between: Gain or loss on disposal is recognized in profit or loss. Do the land and condo account for Inventory under IAS 2 for initial recognition? S. Thank you Silvia, Many thanks. cost model in IAS 16. A company changes from cost to fair value mode. However, if you picked up a fair value model, then it’s a bit more complicated: The derecognition rules (=when you can remove your investment property from your books) in IAS 40 are similar to the rules in IAS 16. active marked ceased existing) and in this case, IAS 40 prescribes (IAS 40.53): The second choice for subsequent measurement of investment property is a cost model. the fair value of the property at that date and its previous carrying amount contractual obligations to purchase, construct or develop investment property or property or the remittance of income and proceeds of disposal. In addition to the disclosures required by paragraph 75, an entity that IAS 40 Investment property prescribes a lot of disclosures to be presented in the financial statements, including the description of selected model, how the fair value was derived, what the classification criteria for investment property are, movements in investment property during the reporting period (please refer to IAS 40.74 and following for more information). From the period of suspension I must transfer the carrying amount from IAS 40 to IAS 16 PPE???? The answer is YES, but only if the change results in the financial statements providing better, more reliable information about company’s financial position, results and other events. Yes, annually. 62 mentions that in this case, the revaluation surplus is transferred to retained earnings on subsequent disposal only. resources.The following are examples of investment property: But definitely, parking lots meet the definition of PPE under IAS 16 S. Hi, Silvia. Would it make a difference if the sub-lease was a finance lease? This is really very helpful.. Hi，very helpful.！Could you also explain what’s the difference between fair value model and revaluation model? in this case, a part of a building that is owner-occupied is treated under IAS 16, and a part that is rented is treated under IAS 40. Hi Sylvia, even if the revaluations do not occur every year? under licence during the term and subject to the conditions contained therein. as with other ifrs, no quantitative guidance is given as to what might be considered ‘ insignificant’. currency of the reporting entity;(f) transfers to and from inventories and What if the company’s main activity is to earn rental income. What is if a property (vacant) has been acquired with the intention to let it after a re-development phase of approx. property backing liabilities that pay a return linked directly to the fair value ScopeThis Standard shall

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