IAS_40_Flashcards_Final

Question 1

What is investment property?

Answer 1

Land or buildings held to earn rent or gain value.

Question 2

Can land be investment property?

Answer 2

Yes, if held for capital appreciation.

Question 3

Can buildings be investment property?

Answer 3

Yes, if rented out or held for value increase.

Question 4

When is property not investment property?

Answer 4

If used in business operations or for admin.

Question 5

Can part of a property be investment property?

Answer 5

Yes, if it can be sold or leased separately.

Question 6

Can property held under lease be investment property?

Answer 6

Yes, if it is held to earn rent or gain value.

Question 7

Can property under a finance lease be investment property?

Answer 7

Yes, if it meets the definition.

Question 8

Can property under an operating lease be investment property?

Answer 8

Only if fair value model is used.

Question 9

How is investment property initially measured?

Answer 9

At cost, including transaction costs.

Question 10

What is included in the cost of investment property?

Answer 10

Purchase price and directly related costs.

Question 11

What are the two models for measuring investment property after purchase?

Answer 11

Cost model and fair value model.

Question 12

What is the cost model for investment property?

Answer 12

Property is shown at cost less depreciation and impairment.

Question 13

What is the fair value model for investment property?

Answer 13

Property is shown at market value and changes go to profit or loss.

Question 14

Is depreciation used in the fair value model?

Answer 14

No, changes in value go directly to profit or loss.

Question 15

Can fair value be used if there is no market data?

Answer 15

No, then the cost model must be used.

Question 16

Can a company choose either model?

Answer 16

Yes, but must apply it to all investment property.

Question 17

Can the model be changed later?

Answer 17

Only if it gives better information.

Question 18

How often is fair value updated?

Answer 18

At each reporting date.

Question 19

Can gains from fair value go to equity?

Answer 19

No, they go to profit or loss.

Question 20

Can losses from fair value go to profit or loss?

Answer 20

Yes, immediately.

Question 21

What happens when investment property is sold?

Answer 21

Remove it from the books and show profit or loss.

Question 22

Can investment property be transferred to owner-occupied property?

Answer 22

Yes, if use changes.

Question 23

How is property remeasured when its use changes?

Answer 23

Use fair value at the date of change.

Question 24

Can owner-occupied property become investment property?

Answer 24

Yes, if rented out or held for value gain.

Question 25

Are investment properties ever used by the business?

Answer 25

No, they are not for own use.

Question 26

What are excluded from investment property?

Answer 26

Property for sale, under construction for sale, or used in production.

Question 27

What disclosures are required under the fair value model?

Answer 27

Fair value, method used, rental income, and expenses.

Question 28

What disclosures are required under the cost model?

Answer 28

Depreciation method, useful life, and fair value.

Question 29

Is there a requirement to disclose method choice?

Answer 29

Yes, and it must be applied consistently.

Question 30

What is included in rental income?

Answer 30

Rent earned from investment properties.

Question 31

What are direct operating expenses?

Answer 31

Costs like repairs and management fees.

Question 32

Can investment property be held for both use and investment?

Answer 32

Yes, if parts can be separated.

Question 33

What if parts cannot be separated?

Answer 33

It is treated as owner-occupied.

Question 34

How is fair value found?

Answer 34

Using market evidence or valuation techniques.

Question 35

Should valuation be by an independent expert?

Answer 35

It is encouraged but not required.