INVESTMENT PROPERTY (IAS 40)

Question 1

What is investment property? (definition)

Answer 1

Property held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both.

Question 2

How are investment property intially measured?

Answer 2

Investment property is initially measured at cost, including transaction costs

Question 3

How are they measured subsequently?

Answer 3

Subsequent measurement: cost or revaluation model

Question 4

Which are the conditions to be respected if the entity choose to account the investment property using the revaluation model?

Answer 4

If fair value model:
- To be applied to all investment property
- Gains or losses arising from changes in the fair value of investment property must be included in profit or loss for the period in which it arises

Question 5

What is Fair Value?

Answer 5

Fair value is the price that would be received to sell the investment property in an orderly transaction between market participants at the measurement date