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prescribes the accounting treatment and disclosure with respect to…
prescribes the accounting treatment and disclosure with respect to investment property.
definition of investment property
property (land or a building or part of a building or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both
exclusions
property being constructed or developed on behalf of third parties;
owner-occupied property;
property held for sale in the ordinary course of business or in the process of construction;
property leased to another entity under a finance lease
property held for use in the production or supply of goods or services;
When to Recognize investment property?
It is probable that future economic benefits associated with the item will flow to the entity; and
The cost of the item can be measured reliably.
initial measurement
investment property is initially measured at cost, including transaction costs (purchase price+any directly attributable expenditure, such as legal fees or professional fees);
we should NOT include: start-up expenses, operating losses, abnormal waste.
measurement after initial recognition
fair value model (price that would be received to sell an asset or paid to transfer a liability);
cost model (cost less accumulated depreciation and less accumulated impairment losses)
transfers from and to investment property
When you transfer from investment property, then the deemed cost is also fair value at the date of transfer.
When you transfer to investment property, then the deemed cost is a fair value at the date of transfer. Difference between asset’s carrying amount and its fair value is treated in the same way as revaluations under IAS 16.
derecognition
We can derecognizeinvestment property in two circumstances: on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected.
Gain or loss on disposal is calculated as difference btw net disposal proceeds and asset's carrying amount.
IAS 40. Investment property
Only if 2 conditions are met: