Indian Accounting Standard (Ind AS) 40

Investment Property
Contents
Paragraphs
OBJECTIVE 1
SCOPE !4
"E#I$ITIO$S %!1%
&ECO'$ITIO$ 1(!1)
*EAS+&E*E$T AT &ECO'$ITIO$ 0,)
*EAS+&E*E$T A#TE& &ECO'$ITIO$ -0,%(
Accounting po.ic/ -0,-C
#air 0a.ue deter1ination --,%%
Inability to determine fair value reliably 53-55
Cost 1ode. %(
T&A$S#E&S %2!(%
"ISPOSA3S ((!2-
"ISC3OS+&E 24!2)
APPE$"ICES
A 4 &e5erences to 1atters contained in other Indian
Accounting Standards
1 Co1parison 6ith IAS 407 Investment Property
1

Indian Accounting Standard (Ind AS) 40
Investment Property
(This Indian Accounting Standard includes paragraphs set in bold type and plain type,
which have equal authority. Paragraphs in bold type indicate the main principles.)
O89ecti0e
1 The objective of this Standard is to prescribe the accounting treatment for
investment property and related disclosure requirements.
Scope
This Standard sha.. 8e app.ied in the recognition7 1easure1ent and
disc.osure o5 in0est1ent propert/:
3 mong other things! this Standard applies to the measurement in a lessee"s
financial statements of investment property interests held under a lease accounted
for as a finance lease and to the measurement in a lessor"s financial statements of
investment property provided to a lessee under an operating lease. This Standard
does not deal #ith matters covered in Ind S 1$ Leases! including%
&a' classification of leases as finance leases or operating leases(
&b' recognition of lease income from investment property &see also Ind S
1) evenue'(
&c' measurement in a lessee"s financial statements of property interests
held under a lease accounted for as an operating lease(
&d' measurement in a lessor"s financial statements of its net investment in a
finance lease(
&e' accounting for sale and leasebac* transactions( and
&f' disclosure about finance leases and operating leases.
+ This Standard does not apply to%
&a' biological assets related to agricultural activity &see Ind S +1
Agriculture
!
)( and
&b' mineral rights and mineral reserves such as oil! natural gas and similar
non-regenerative resources.
1
Ind AS 41 Agriculture is under formulation.
2
"e5initions
% The 5o..o6ing ter1s are used in this Standard 6ith the 1eanings speci5ied4
"arrying amount is the a1ount at 6hich an asset is recognised in the 8a.ance
sheet:
"ost is the a1ount o5 cash or cash e;ui0a.ents paid or the 5air 0a.ue o5 other
consideration gi0en to ac;uire an asset at the ti1e o5 its ac;uisition or
construction or7 6here app.ica8.e7 the a1ount attri8uted to that asset 6hen
initia../ recognised in accordance 6ith the speci5ic re;uire1ents o5 other
Indian Accounting Standards7 eg Ind AS 10 Share-based Payment:
#air value is the a1ount 5or 6hich an asset cou.d 8e e<changed 8et6een
=no6.edgea8.e7 6i..ing parties in an ar1>s .ength transaction:
Investment property is propert/ (.and or a 8ui.ding?or part o5 a 8ui.ding?or
8oth) he.d (8/ the o6ner or 8/ the .essee under a 5inance .ease) to earn
renta.s or 5or capita. appreciation or 8oth7 rather than 5or4
(a) use in the production or supp./ o5 goods or ser0ices or 5or
ad1inistrati0e purposes@ or
(8) sa.e in the ordinar/ course o5 8usiness:
$wner%occupied property is propert/ he.d (8/ the o6ner or 8/ the .essee under
a 5inance .ease) 5or use in the production or supp./ o5 goods or ser0ices or
5or ad1inistrati0e purposes:
( A&e5er to Appendi< 1B
$ Investment property is held to earn rentals or for capital appreciation or both.
Therefore! an investment property generates cash flo#s largely independently of
the other assets held by an entity. This distinguishes investment property from
o#ner-occupied property. The production or supply of goods or services &or the
use of property for administrative purposes' generates cash flo#s that are
attributable not only to property! but also to other assets used in the production or
supply process. Ind S 1, Property, Plant and &quipment applies to o#ner-
occupied property.
) The follo#ing are e-amples of investment property%
&a' land held for long-term capital appreciation rather than for short-term
sale in the ordinary course of business.
&b' land held for a currently undetermined future use. &If an entity has not
determined that it #ill use the land as o#ner-occupied property or for
short-term sale in the ordinary course of business! the land is regarded
as held for capital appreciation.'
3
&c' a building o#ned by the entity &or held by the entity under a finance
lease' and leased out under one or more operating leases.
&d' a building that is vacant but is held to be leased out under one or more
operating leases.
&e' property that is being constructed or developed for future use as
investment property.
. The follo#ing are e-amples of items that are not investment property and are
therefore outside the scope of this Standard%
&a' property intended for sale in the ordinary course of business or in the
process of construction or development for such sale &see Ind S /
Inventories'! for e-ample! property acquired e-clusively #ith a vie# to
subsequent disposal in the near future or for development and resale.
&b' property being constructed or developed on behalf of third parties &see
Ind S 11 "onstruction "ontracts'.
&c' o#ner-occupied property &see Ind S 1,'! including &among other
things' property held for future use as o#ner-occupied property!
property held for future development and subsequent use as o#ner-
occupied property! property occupied by employees &#hether or not the
employees pay rent at mar*et rates' and o#ner-occupied property
a#aiting disposal.
&d' 01efer to ppendi- 12
&e' property that is leased to another entity under a finance lease.
13 Some properties comprise a portion that is held to earn rentals or for capital
appreciation and another portion that is held for use in the production or supply of
goods or services or for administrative purposes. If these portions could be sold
separately &or leased out separately under a finance lease'! an entity accounts for
the portions separately. If the portions could not be sold separately! the property is
investment property only if an insignificant portion is held for use in the production
or supply of goods or services or for administrative purposes.
11 In some cases! an entity provides ancillary services to the occupants of a property it
holds. n entity treats such a property as investment property if the services are
insignificant to the arrangement as a #hole. n e-ample is #hen the o#ner of an
office building provides security and maintenance services to the lessees #ho
occupy the building.
1/ In other cases! the services provided are significant. 4or e-ample! if an entity o#ns
and manages a hotel! services provided to guests are significant to the
arrangement as a #hole. Therefore! an o#ner-managed hotel is o#ner-occupied
property! rather than investment property.
4
13 It may be difficult to determine #hether ancillary services are so significant that a
property does not qualify as investment property. 4or e-ample! the o#ner of a
hotel sometimes transfers some responsibilities to third parties under a
management contract. The terms of such contracts vary #idely. t one end of the
spectrum! the o#ner"s position may! in substance! be that of a passive investor. t
the other end of the spectrum! the o#ner may simply have outsourced day-to-day
functions #hile retaining significant e-posure to variation in the cash flo#s
generated by the operations of the hotel.
1+ 5udgement is needed to determine #hether a property qualifies as investment
property. n entity develops criteria so that it can e-ercise that judgement
consistently in accordance #ith the definition of investment property and #ith the
related guidance in paragraphs $613. 7aragraph $5&c' requires an entity to
disclose these criteria #hen classification is difficult.
15 In some cases! an entity o#ns property that is leased to! and occupied by! its parent
or another subsidiary. The property does not qualify as investment property in the
consolidated financial statements! because the property is o#ner-occupied from
the perspective of the group. 8o#ever! from the perspective of the entity that o#ns
it! the property is investment property if it meets the definition in paragraph 5.
Therefore! the lessor treats the property as investment property in its individual
financial statements.
&ecognition
1( In0est1ent propert/ sha.. 8e recognised as an asset 6hen7 and on./ 6hen4
(a) it is pro8a8.e that the 5uture econo1ic 8ene5its that are associated
6ith the in0est1ent propert/ 6i.. 5.o6 to the entit/@ and
(8) the cost o5 the in0est1ent propert/ can 8e 1easured re.ia8./:
1$ n entity evaluates under this recognition principle all its investment property costs
at the time they are incurred. These costs include costs incurred initially to acquire
an investment property and costs incurred subsequently to add to! replace part of!
or service a property.
1) 9nder the recognition principle in paragraph 1,! an entity does not recognise in the
carrying amount of an investment property the costs of the day-to-day servicing of
such a property. 1ather! these costs are recognised in profit or loss as incurred.
:osts of day-to-day servicing are primarily the cost of labour and consumables!
and may include the cost of minor parts. The purpose of these e-penditures is
often described as for the ;repairs and maintenance" of the property.
1. 7arts of investment properties may have been acquired through replacement. 4or
e-ample! the interior #alls may be replacements of original #alls. 9nder the
recognition principle! an entity recognises in the carrying amount of an investment
property the cost of replacing part of an e-isting investment property at the time
that cost is incurred if the recognition criteria are met. The carrying amount of
those parts that are replaced is derecognised in accordance #ith the derecognition
provisions of this Standard.
5
*easure1ent at recognition
0 An in0est1ent propert/ sha.. 8e 1easured initia../ at its cost: Transaction
costs sha.. 8e inc.uded in the initia. 1easure1ent:
/1 The cost of a purchased investment property comprises its purchase price and any
directly attributable e-penditure. <irectly attributable e-penditure includes! for
e-ample! professional fees for legal services! property transfer ta-es and other
transaction costs.
// 01efer to ppendi- 12
/3 The cost of an investment property is not increased by%
&a' start-up costs &unless they are necessary to bring the property to the
condition necessary for it to be capable of operating in the manner
intended by management'!
&b' operating losses incurred before the investment property achieves the
planned level of occupancy! or
&c' abnormal amounts of #asted material! labour or other resources
incurred in constructing or developing the property.
/+ If payment for an investment property is deferred! its cost is the cash price
equivalent. The difference bet#een this amount and the total payments is
recognised as interest e-pense over the period of credit.
% The initia. cost o5 a propert/ interest he.d under a .ease and c.assi5ied as an
in0est1ent propert/ sha.. 8e as prescri8ed 5or a 5inance .ease 8/ paragraph
0 o5 Ind AS 127 ie the asset sha.. 8e recognised at the .o6er o5 the 5air 0a.ue
o5 the propert/ and the present 0a.ue o5 the 1ini1u1 .ease pa/1ents: An
e;ui0a.ent a1ount sha.. 8e recognised as a .ia8i.it/ in accordance 6ith that
sa1e paragraph:
/, ny premium paid for a lease is treated as part of the minimum lease payments for
this purpose! and is therefore included in the cost of the asset! but is e-cluded
from the liability. If a property interest held under a lease is classified as
investment property! the item accounted for at fair value is that interest and not the
underlying property. =uidance on determining the fair value of a property interest
is set out in paragraphs 3365/. That guidance is also relevant to the determination
of fair value #hen that value is used as cost for initial recognition purposes.
/$ >ne or more investment properties may be acquired in e-change for a non-
monetary asset or assets! or a combination of monetary and non-monetary assets.
The follo#ing discussion refers to an e-change of one non-monetary asset for
another! but it also applies to all e-changes described in the preceding sentence.
The cost of such an investment property is measured at fair value unless &a' the
e-change transaction lac*s commercial substance or &b' the fair value of neither
the asset received nor the asset given up is reliably measurable. The acquired
asset is measured in this #ay even if an entity cannot immediately derecognise
6
the asset given up. If the acquired asset is not measured at fair value! its cost is
measured at the carrying amount of the asset given up.
/) n entity determines #hether an e-change transaction has commercial substance
by considering the e-tent to #hich its future cash flo#s are e-pected to change as
a result of the transaction. n e-change transaction has commercial substance if%
&a' the configuration &ris*! timing and amount' of the cash flo#s of the asset
received differs from the configuration of the cash flo#s of the asset
transferred! or
&b' the entity-specific value of the portion of the entity"s operations affected
by the transaction changes as a result of the e-change! and
&c' the difference in &a' or &b' is significant relative to the fair value of the
assets e-changed.
4or the purpose of determining #hether an e-change transaction has commercial
substance! the entity-specific value of the portion of the entity"s operations affected
by the transaction shall reflect post-ta- cash flo#s. The result of these analyses
may be clear #ithout an entity having to perform detailed calculations.
/. The fair value of an asset for #hich comparable mar*et transactions do not e-ist is
reliably measurable if &a' the variability in the range of reasonable fair value
estimates is not significant for that asset or &b' the probabilities of the various
estimates #ithin the range can be reasonably assessed and used in estimating fair
value. If the entity is able to determine reliably the fair value of either the asset
received or the asset given up! then the fair value of the asset given up is used to
measure cost unless the fair value of the asset received is more clearly evident.
*easure1ent a5ter recognition
Accounting po.ic/
-0 An entit/ sha.. adopt as its accounting po.ic/ the cost 1ode. prescri8ed in
paragraph %( to a.. o5 its in0est1ent propert/:
31 01efer to ppendi- 12
3/ This Standard requires all entities to determine the fair value of investment property
for the purpose of disclosure even though they are required to follo# the cost
model. n entity is encouraged! but not required! to determine the fair value of
investment property on the basis of a valuation by an independent valuer #ho
holds a recognised and relevant professional qualification and has recent
e-perience in the location and category of the investment property being valued.
-A,-C A&e5er to Appendi< 1B
#air 0a.ue deter1ination
7
--,-% A&e5er to Appendi< 1B
3, The fair value of investment property is the price at #hich the property could be
e-changed bet#een *no#ledgeable! #illing parties in an arm"s length transaction
&see paragraph 5'. 4air value specifically e-cludes an estimated price inflated or
deflated by special terms or circumstances such as atypical financing! sale and
leasebac* arrangements! special considerations or concessions granted by
anyone associated #ith the sale.
3$ n entity determines fair value #ithout any deduction for transaction costs it may
incur on sale or other disposal.
-C The 5air 0a.ue o5 in0est1ent propert/ sha.. re5.ect 1ar=et conditions at the
end o5 the reporting period:
3. 4air value is time-specific as of a given date. ?ecause mar*et conditions may
change! the amount reported as fair value may be incorrect or inappropriate if
estimated as of another time. The definition of fair value also assumes
simultaneous e-change and completion of the contract for sale #ithout any
variation in price that might be made in an arm"s length transaction bet#een
*no#ledgeable! #illing parties if e-change and completion are not simultaneous.
+3 The fair value of investment property reflects! among other things! rental income
from current leases and reasonable and supportable assumptions that represent
#hat *no#ledgeable! #illing parties #ould assume about rental income from future
leases in the light of current conditions. It also reflects! on a similar basis! any cash
outflo#s &including rental payments and other outflo#s' that could be e-pected in
respect of the property. Some of those outflo#s are reflected in the liability
#hereas others relate to outflo#s that are not recognised in the financial
statements until a later date &eg periodic payments such as contingent rents'.
+1 01efer to ppendi- 12
+/ The definition of fair value refers to ;*no#ledgeable! #illing parties". In this conte-t!
;*no#ledgeable" means that both the #illing buyer and the #illing seller are
reasonably informed about the nature and characteristics of the investment
property! its actual and potential uses! and mar*et conditions at the end of the
reporting period. #illing buyer is motivated! but not compelled! to buy. This buyer
is neither over-eager nor determined to buy at any price. The assumed buyer
#ould not pay a higher price than a mar*et comprising *no#ledgeable! #illing
buyers and sellers #ould require.
+3 #illing seller is neither an over-eager nor a forced seller! prepared to sell at any
price! nor one prepared to hold out for a price not considered reasonable in current
mar*et conditions. The #illing seller is motivated to sell the investment property at
mar*et terms for the best price obtainable. The factual circumstances of the actual
investment property o#ner are not a part of this consideration because the #illing
seller is a hypothetical o#ner &eg a #illing seller #ould not ta*e into account the
particular ta- circumstances of the actual investment property o#ner'.
8
++ The definition of fair value refers to an arm"s length transaction. n arm"s length
transaction is one bet#een parties that do not have a particular or special
relationship that ma*es prices of transactions uncharacteristic of mar*et
conditions. The transaction is presumed to be bet#een unrelated parties! each
acting independently.
+5 The best evidence of fair value is given by current prices in an active mar*et for
similar property in the same location and condition and subject to similar lease and
other contracts. n entity ta*es care to identify any differences in the nature!
location or condition of the property! or in the contractual terms of the leases and
other contracts relating to the property.
+, In the absence of current prices in an active mar*et of the *ind described in
paragraph +5! an entity considers information from a variety of sources! including%
&a' current prices in an active mar*et for properties of different nature!
condition or location &or subject to different lease or other contracts'!
adjusted to reflect those differences(
&b' recent prices of similar properties on less active mar*ets! #ith
adjustments to reflect any changes in economic conditions since the
date of the transactions that occurred at those prices( and
&c' discounted cash flo# projections based on reliable estimates of future
cash flo#s! supported by the terms of any e-isting lease and other
contracts and &#hen possible' by e-ternal evidence such as current
mar*et rents for similar properties in the same location and condition!
and using discount rates that reflect current mar*et assessments of the
uncertainty in the amount and timing of the cash flo#s.
+$ In some cases! the various sources listed in the previous paragraph may suggest
different conclusions about the fair value of an investment property. n entity
considers the reasons for those differences! in order to arrive at the most reliable
estimate of fair value #ithin a range of reasonable fair value estimates.
+) In e-ceptional cases! there is clear evidence #hen an entity first acquires an
investment property &or #hen an e-isting property first becomes investment
property after a change in use' that the variability in the range of reasonable fair
value estimates #ill be so great! and the probabilities of the various outcomes so
difficult to assess! that the usefulness of a single estimate of fair value is negated.
This may indicate that the fair value of the property #ill not be reliably
determinable on a continuing basis &see paragraph 53'.
+. 4air value differs from value in use! as defined in Ind S 3, Impairment o' Assets.
4air value reflects the *no#ledge and estimates of *no#ledgeable! #illing buyers
and sellers. In contrast! value in use reflects the entity"s estimates! including the
effects of factors that may be specific to the entity and not applicable to entities in
general. 4or e-ample! fair value does not reflect any of the follo#ing factors to the
e-tent that they #ould not be generally available to *no#ledgeable! #illing buyers
and sellers%
9
&a' additional value derived from the creation of a portfolio of properties in
different locations(
&b' synergies bet#een investment property and other assets(
&c' legal rights or legal restrictions that are specific only to the current
o#ner( and
&d' ta- benefits or ta- burdens that are specific to the current o#ner.
53 01efer to ppendi- 12
51 The fair value of investment property does not reflect future capital e-penditure that
#ill improve or enhance the property and does not reflect the related future
benefits from this future e-penditure.
5/ 01efer to ppendi- 12
Ina8i.it/ to deter1ine 5air 0a.ue re.ia8./
%- There is a re8utta8.e presu1ption that an entit/ can re.ia8./ deter1ine the 5air
0a.ue o5 an in0est1ent propert/ on a continuing 8asis: Do6e0er7 in
e<ceptiona. cases7 there is c.ear e0idence 6hen an entit/ 5irst ac;uires an
in0est1ent propert/ (or 6hen an e<isting propert/ 5irst 8eco1es in0est1ent
propert/ a5ter a change in use) that the 5air 0a.ue o5 the in0est1ent propert/
is not re.ia8./ deter1ina8.e on a continuing 8asis: This arises 6hen7 and
on./ 6hen7 co1para8.e 1ar=et transactions are in5re;uent and a.ternati0e
re.ia8.e esti1ates o5 5air 0a.ue (5or e<a1p.e7 8ased on discounted cash 5.o6
pro9ections) are not a0ai.a8.e: I5 an entit/ deter1ines that the 5air 0a.ue o5 an
in0est1ent propert/ under construction is not re.ia8./ deter1ina8.e 8ut
e<pects the 5air 0a.ue o5 the propert/ to 8e re.ia8./ deter1ina8.e 6hen
construction is co1p.ete7 it sha.. deter1ine the 5air 0a.ue o5 that in0est1ent
propert/ either 6hen its 5air 0a.ue 8eco1es re.ia8./ deter1ina8.e or
construction is co1p.eted (6hiche0er is ear.ier): I5 an entit/ deter1ines that
the 5air 0a.ue o5 an in0est1ent propert/ (other than an in0est1ent propert/
under construction) is not re.ia8./ deter1ina8.e on a continuing 8asis7 the
entit/ sha.. 1a=e the disc.osures re;uired 8/ paragraphs 2)(e)(i)7 (ii) and (iii):
53 >nce an entity becomes able to measure reliably the fair value of an investment
property under construction for #hich the fair value #as not previously determined!
it shall determine the fair value of that property. >nce construction of that property
is complete! it is presumed that fair value can be measured reliably. If this is not
the case! in accordance #ith paragraph 53! the entity shall ma*e the disclosures
required by paragraphs $.&e'&i'! &ii' and &iii'.
53? The presumption that the fair value of investment property under construction can
be measured reliably can be rebutted only on initial recognition. n entity that has
determined the fair value of an item of investment property under construction may
not conclude that the fair value of the completed investment property cannot be
determined reliably.
10
5+ In the e-ceptional cases #hen an entity is compelled! for the reason given in
paragraph 53! to ma*e the disclosures required by paragraphs $.&e'&i'! &ii' and
&iii'! it shall determine the fair value of all its other investment property! including
investment property under construction. In these cases! although an entity may
ma*e the disclosures required by paragraphs $.&e'&i'! &ii' and &iii' for one
investment property! the entity shall continue to determine the fair value of each of
the remaining properties for disclosure required by paragraph $.&e'.
%% I5 an entit/ has pre0ious./ deter1ined the 5air 0a.ue o5 an in0est1ent
propert/7 it sha.. continue to deter1ine the 5air 0a.ue o5 that propert/ unti.
disposa. (or unti. the propert/ 8eco1es o6ner,occupied propert/ or the
entit/ 8egins to de0e.op the propert/ 5or su8se;uent sa.e in the ordinar/
course o5 8usiness) e0en i5 co1para8.e 1ar=et transactions 8eco1e .ess
5re;uent or 1ar=et prices 8eco1e .ess readi./ a0ai.a8.e:
Cost 1ode.
%( A5ter initia. recognition7 an entit/ sha.. 1easure a.. o5 its in0est1ent
properties in accordance 6ith Ind AS 1(>s re;uire1ents 5or cost 1ode.7
other than those that 1eet the criteria to 8e c.assi5ied as he.d 5or sa.e (or are
inc.uded in a disposa. group that is c.assi5ied as he.d 5or sa.e) in accordance
6ith Ind AS 10% Non-current Assets Held for Sale and Discontinued
Operations: In0est1ent properties that 1eet the criteria to 8e c.assi5ied as
he.d 5or sa.e (or are inc.uded in a disposa. group that is c.assi5ied as he.d 5or
sa.e) sha.. 8e 1easured in accordance 6ith Ind AS 10%:
Trans5ers
%2 Trans5ers to7 or 5ro17 in0est1ent propert/ sha.. 8e 1ade 6hen7 and on./
6hen7 there is a change in use7 e0idenced 8/4
(a) co11ence1ent o5 o6ner,occupation7 5or a trans5er 5ro1
in0est1ent propert/ to o6ner,occupied propert/@
(8) co11ence1ent o5 de0e.op1ent 6ith a 0ie6 to sa.e7 5or a trans5er
5ro1 in0est1ent propert/ to in0entories@
(c) end o5 o6ner,occupation7 5or a trans5er 5ro1 o6ner,occupied
propert/ to in0est1ent propert/@ or
(d) co11ence1ent o5 an operating .ease to another part/7 5or a
trans5er 5ro1 in0entories to in0est1ent propert/:
(e) A&e5er to Appendi< 1B
5) 7aragraph 5$&b' requires an entity to transfer a property from investment property
to inventories #hen! and only #hen! there is a change in use! evidenced by
commencement of development #ith a vie# to sale. @hen an entity decides to
dispose of an investment property #ithout development! it continues to treat the
property as an investment property until it is derecognised &eliminated from the
balance sheet' and does not treat it as inventory. Similarly! if an entity begins to
11
redevelop an e-isting investment property for continued future use as investment
property! the property remains an investment property and is not reclassified as
o#ner-occupied property during the redevelopment.
5. Transfers bet#een investment property! o#ner-occupied property and inventories
do not change the carrying amount of the property transferred and they do not
change the cost of that property for measurement or disclosure purposes.
(0,(% A&e5er to Appendi< 1B
"isposa.s
(( An in0est1ent propert/ sha.. 8e derecognised (e.i1inated 5ro1 the 8a.ance
sheet) on disposa. or 6hen the in0est1ent propert/ is per1anent./
6ithdra6n 5ro1 use and no 5uture econo1ic 8ene5its are e<pected 5ro1 its
disposa.:
,$ The disposal of an investment property may be achieved by sale or by entering into
a finance lease. In determining the date of disposal for investment property! an
entity applies the criteria in Ind S 1) for recognising revenue from the sale of
goods and considers the related guidance in the ppendi- A to Ind S 1). Ind S
1$ applies to a disposal effected by entering into a finance lease and to a sale and
leasebac*.
,) If! in accordance #ith the recognition principle in paragraph 1,! an entity recognises
in the carrying amount of an asset the cost of a replacement for part of an
investment property! it derecognises the carrying amount of the replaced part.
replaced part may not be a part that #as depreciated separately. If it is not
practicable for an entity to determine the carrying amount of the replaced part! it
may use the cost of the replacement as an indication of #hat the cost of the
replaced part #as at the time it #as acquired or constructed.
() 'ains or .osses arising 5ro1 the retire1ent or disposa. o5 in0est1ent propert/
sha.. 8e deter1ined as the di55erence 8et6een the net disposa. proceeds and
the carr/ing a1ount o5 the asset and sha.. 8e recognised in pro5it or .oss
(un.ess Ind AS 12 re;uires other6ise on a sa.e and .ease8ac=) in the period
o5 the retire1ent or disposa.:
$3 The consideration receivable on disposal of an investment property is recognised
initially at fair value. In particular! if payment for an investment property is deferred!
the consideration received is recognised initially at the cash price equivalent. The
difference bet#een the nominal amount of the consideration and the cash price
equivalent is recognised as interest revenue in accordance #ith Ind S 1) using
the effective interest method.
$1 n entity applies Ind S 3$ or other Standards! as appropriate! to any liabilities that
it retains after disposal of an investment property.
12
2 Co1pensation 5ro1 third parties 5or in0est1ent propert/ that 6as i1paired7
.ost or gi0en up sha.. 8e recognised in pro5it or .oss 6hen the co1pensation
8eco1es recei0a8.e:
$3 Impairments or losses of investment property! related claims for or payments of
compensation from third parties and any subsequent purchase or construction of
replacement assets are separate economic events and are accounted for
separately as follo#s%
&a' impairments of investment property are recognised in accordance #ith
Ind S 3,(
&b' retirements or disposals of investment property are recognised in
accordance #ith paragraphs ,,6$1 of this Standard(
&c' compensation from third parties for investment property that #as
impaired! lost or given up is recognised in profit or loss #hen it becomes
receivable( and
&d' the cost of assets restored! purchased or constructed as replacements
is determined in accordance #ith paragraphs /36/. of this Standard.
"isc.osure
$+ The disclosures belo# apply in addition to those in Ind S 1$. In accordance #ith
Ind S 1$! the o#ner of an investment property provides lessors" disclosures
about leases into #hich it has entered. n entity that holds an investment property
under a finance lease provides lessees" disclosures for finance leases and lessors"
disclosures for any operating leases into #hich it has entered.
2% An entit/ sha.. disc.ose4
(a) its accounting po.ic/ 5or 1easure1ent o5 in0est1ent propert/:
(8) A&e5er to Appendi< 1B
(c) 6hen c.assi5ication is di55icu.t (see paragraph 14)7 the criteria it
uses to distinguish in0est1ent propert/ 5ro1 o6ner,occupied
propert/ and 5ro1 propert/ he.d 5or sa.e in the ordinar/ course o5
8usiness:
(d) the 1ethods and signi5icant assu1ptions app.ied in deter1ining
the 5air 0a.ue o5 in0est1ent propert/7 inc.uding a state1ent
6hether the deter1ination o5 5air 0a.ue 6as supported 8/ 1ar=et
e0idence or 6as 1ore hea0i./ 8ased on other 5actors (6hich the
entit/ sha.. disc.ose) 8ecause o5 the nature o5 the propert/ and
.ac= o5 co1para8.e 1ar=et data:
13
(e) the e<tent to 6hich the 5air 0a.ue o5 in0est1ent propert/ (as
1easured or disc.osed in the 5inancia. state1ents) is 8ased on a
0a.uation 8/ an independent 0a.uer 6ho ho.ds a recognised and
re.e0ant pro5essiona. ;ua.i5ication and has recent e<perience in
the .ocation and categor/ o5 the in0est1ent propert/ 8eing 0a.ued:
I5 there has 8een no such 0a.uation7 that 5act sha.. 8e disc.osed:
(5) the a1ounts recognised in pro5it or .oss 5or4
(i) renta. inco1e 5ro1 in0est1ent propert/@
(ii) direct operating e<penses (inc.uding repairs and
1aintenance) arising 5ro1 in0est1ent propert/ that
generated renta. inco1e during the period@ and
(iii) direct operating e<penses (inc.uding repairs and
1aintenance) arising 5ro1 in0est1ent propert/ that did not
generate renta. inco1e during the period:
(i0) A&e5er to Appendi< 1B
(g) the e<istence and a1ounts o5 restrictions on the rea.isa8i.it/ o5
in0est1ent propert/ or the re1ittance o5 inco1e and proceeds o5
disposa.:
(h) contractua. o8.igations to purchase7 construct or de0e.op
in0est1ent propert/ or 5or repairs7 1aintenance or
enhance1ents:
2(,2C A&e5er to Appendi< 1B
2) In addition to the disc.osures re;uired 8/ paragraph 2%7 an entit/ sha..
disc.ose4
(a) the depreciation 1ethods used@
(8) the use5u. .i0es or the depreciation rates used@
(c) the gross carr/ing a1ount and the accu1u.ated depreciation
(aggregated 6ith accu1u.ated i1pair1ent .osses) at the 8eginning
and end o5 the period@
(d) a reconci.iation o5 the carr/ing a1ount o5 in0est1ent propert/ at
the 8eginning and end o5 the period7 sho6ing the 5o..o6ing4
(i) additions7 disc.osing separate./ those additions resu.ting
5ro1 ac;uisitions and those resu.ting 5ro1 su8se;uent
e<penditure recognised as an asset@
(ii) additions resu.ting 5ro1 ac;uisitions through 8usiness
co18inations@
14
(iii) assets c.assi5ied as he.d 5or sa.e or inc.uded in a disposa.
group c.assi5ied as he.d 5or sa.e in accordance 6ith Ind AS
10% and other disposa.s@
(i0) depreciation@
(0) the a1ount o5 i1pair1ent .osses recognised7 and the a1ount
o5 i1pair1ent .osses re0ersed7 during the period in
accordance 6ith Ind AS -(@
(0i) the net e<change di55erences arising on the trans.ation o5 the
5inancia. state1ents into a di55erent presentation currenc/7
and on trans.ation o5 a 5oreign operation into the presentation
currenc/ o5 the reporting entit/@
(0ii) trans5ers to and 5ro1 in0entories and o6ner,occupied
propert/@ and
(0iii) other changes@ and
(e) the 5air 0a.ue o5 in0est1ent propert/: In the e<ceptiona. cases
descri8ed in paragraph %-7 6hen an entit/ cannot deter1ine the
5air 0a.ue o5 the in0est1ent propert/ re.ia8./7 it sha.. disc.ose4
(i) a description o5 the in0est1ent propert/@
(ii) an e<p.anation o5 6h/ 5air 0a.ue cannot 8e deter1ined
re.ia8./@ and
(iii) i5 possi8.e7 the range o5 esti1ates 6ithin 6hich 5air 0a.ue is
high./ .i=e./ to .ie:
15
Appendi< A
&e5erences to 1atters contained in other Indian
Accounting Standards
This Appendi( is an integral part o' Indian Accounting Standard (Ind AS) )* Investment
Property .
1: Appendi< A Income Taxes-ecovery of evalued Non-Depreciable Assets
contained in Ind AS 17 Income Taxes 1a=es re5erence to this Standard a.so:
16
Appendi< 1
+ote, This Appendi( is not a part o' the Indian Accounting Standard. The purpose o' this
Appendi( is only to -ring out the di''erences, i' any, -etween Indian Accounting Standard
(Ind AS) )* and the corresponding International Accounting Standard (IAS) )*, Investment
Property.
Co1parison 6ith IAS 407 Investment Property
1 IS +3 permits both cost model and fair value model &e-cept in some situations' for
measurement of investment properties after initial recognition. Ind S +3 permits only the
cost model. The follo#ing paragraphs of IS +3 #hich deal #ith fair value model have been
deleted in Ind S +3. In order to maintain consistency #ith paragraph numbers of IS +3!
the paragraph numbers are retained in Ind S +3%
&i' 7aragraph ,
&ii' 7aragraph 31
&iii' 7aragraphs 3/-3/:
&iv' 7aragraphs 33-35
&v' 7aragraph +1
&vi' 7aragraph 53
&vii' 7aragraph 5/
&viii' 7aragraphs ,3-,5
&i-' 7aragraph $5&b'
&-' 7aragraph $5&f'&iv'
&-i' 7aragraphs $,-$)
/ The transitional provisions given in IS +3 have not been included in Ind S +3 since
all transitional provisions related to Ind Ss! #herever considered appropriate have been
included in Ind S 131! 4irst-time doption of Indian ccounting Standards corresponding
to I41S 1! 4irst-time doption of International 4inancial 1eporting Standards.
3 IS +3 requires disclosure of fair values of investment property #hen cost model is
used. Since this requirement is retained in Ind S +3! paragraphs 53! 53! 53?! 5+ and 55
and certain other paragraphs of IS +3 have been modified. The modifications include
substitution of fair value measurement #ith fair value determinationBdisclosure and deletion
of reference to use of cost model #hen fair value determination is unreliable.
+ IS +3 permits treatment of property interest held in an operating lease as investment
property! if the definition of investment property is other#ise met and fair value model is
17
applied. In such cases! the operating lease #ould be accounted as if it #ere a finance
lease. Since Ind S +3 prohibits the use of fair value model! this treatment is prohibited in
Ind S +3. s a result! paragraph , of IS +3 has been deleted in Ind S +3 &see point 1&i'
above'. In addition! the e-pression ;investment property under a finance or operating lease"
appearing in paragraph $+ of IS +3 has been modified as ;investment property under a
finance lease" in Ind S +3.
5 s a result of prohibition of use of fair value model in Ind S +3! there are some
modifications in the #ording of paragraph /, &removal of the #ords ;for the fair value
model"'! paragraphs 33 and 3/ &ccounting policy'! heading above paragraph 33 &;4air
value determination" instead of ;4air value model"'! paragraph 5, ! paragraph 5. &deletion
of portion relating to fair value model'! paragraph ,) &deletion of a portion dealing #ith fair
value model'! heading above paragraph $+ &deletion of the heading ;4air value model and
cost model"' and $5&a' &disclosure of accounting policy' as compared to the #ording used
in IS +3.
, <ifferent terminology is used in this Standard e.g.! the term Ebalance sheet" is used
instead of ;Statement of financial position".
$ The follo#ing paragraphs appear as ;<eleted" in IS +3. In order to maintain
consistency #ith paragraph numbers of IS +3! the paragraph numbers are retained in Ind
S +3%
&i' 7aragraph .&d'
&ii' 7aragraph //
&iii' 7aragraph 5$&e'
18