Investment Properties Flashcards
(8 cards)
Which accounting standard deals with investment properties
IAS 40
What is defined as investment property
Property held for investment potential via rental income (under an OPERATING lease) or capital appreciation
Includes self- constructed or under development for future use as IP
What are 4 main instances where an asset would not be an investment property
- Assets rented between group companies - IAS 16
- Property leased out under finance lease - IFRS 16
- Significant services are provided by the entity to the lessee - IAS 16
- Significant proportion of property is owner occupied and leases out balance - IAS 16
What are the two methods of subsequent measurement of IP
Cost - cost less depn or impairment
FV - revalue to FV with GAINS/ LOSSES GOING TO SOPL (no Reval res like PPE)
IP - Change in use: occupation of the property by the entity itself
IP»_space;» PPE
Prop now owner occupied so use IAS 16
Where IP is measured at FV, its FV at the date of change of usage should be the treated as the deemed cost for future accounting
IP - Change in use: development of property commences with the intention that it will then be sold by the entity
IP»_space;» Inventory
Property is being held for sale so should be reclassified in accordance with IAS 2
Where IP was measured at FV, the FV at the date of change of usage should be used as the deemed cost for future accounting
IP - Change in use: building occupied by the entity was vacated to be let to 3rd parties
PPE»_space;» IP
Transfer to IAS 40
Where IP are measured at FV, property should be revalued at date of change of usage and any difference should be recognized as a revaluation under IAS 16
IP - Change in use: property originally held for inventory has now been let to a 3rd party
INVENTORY»_space;> IP
Prop no longer held for sale and is held for future income. So transfer to IAS 40
Where IP are measured at FV, property should be revalued at the date of change and difference recognised immediately in SOPL
