E-Portfolio

CHAPTER 10

PAS 40 – Investment
Property

D Land or Building held by the Additional Guidelines:

E owner or by the lessee as a
right of use to earn rental or 1. If the property is use for
F for capital appreciation MULTIPLE PURPOSE and can
I be separated, then account
N every portion separately. If
it cannot be separated,
I judgement should be used
EXAMPLES
T on the classification based
I  Land held for capital on the significance of its
appreciation intention of use.
O
 Land held for currently 2. If an entity provides
N undetermined future ancillary services to the
use property, classify it as
 Building owned leased INVESTMENT PROPETY if
out under operating the additional service is
lease INSIGNIFICANT.
 A right of use asset of a 3. If an entity leased to,
building lease out under occupied the property to
operating lease PARENT or SUBSIDIARY, in
 Property that is being the consolidated FS, the
developed for future use property is OWNER-
as investment property OCCUPIED however it is an
INVESTMENT PROPERTY for
the individual FS.

RECOGNITION CRITERIA

PROBABLE FUTURE ECONOMIC BENEFITS

COST CAN BE MEASURED RELIABLY

 Cost of day to day servicing of property are not

CAPITALIZED but expense immediately as
repairs and maintenance.

 Replaced parts of an investment property will

be recognized in the carrying amount of the
asset and derecognized the parts replaced.
 A. Upon disposal (upon sale or entering into a finance
lease)
DERECOGNITION B. When the investment property is permanently
withdrawn from use and no future economic
benefits are expected from its disposal.

Difference between the NET DISPOSAL PROCEEDS and the

Gains or Losses CARRYING AMOUNT of the ASSET.

INITIAL MEASUREMENT

AT COST

General

Excluded from Cost

 Initial Measurement at cost plus transaction cost.
 Cost of purchased investment property comprises its
purchase price and any directly attributable
expenditure.

 Professional fees for legal services, property  Startup costs, unless

transfer taxes and other transaction costs. necessary to bring the
property to the
condition necessary
DEFERRED PAYMENTS for its intended use.
 Operating losses
 Cash price equivalent incurred before the
investment property
achieves the planned
EXCHANGE OF ASSETS level of occupancy.
 Abnormal amounts of
wasted material,
 Measured at FAIR VALUE unless exchange has no
labor or other
commercial substance of FV is not measured
resources incurred in
reliably. If so, the asset will be measured at
constructing or
CARRYING AMOUNT of the ASSET GIVEN UP.
developing the
property.

SUBSEQUENT MEASUREMENT

FAIR VALUE MODEL COST MODEL

 Carried at
 Cost less Accumulated depreciation and any
Fair Value
accumulated impairment loss
(PFRS 13)
 Not subject to depreciation but changes
FAIR VALUE METHOD in FV to be reported in Profit/loss

PFRS 13

ADDITIONAL GUIDELINE ON
FAIR VALUE

O
W
Fair Value of
N
the Property  Shall not be adjusted with
E transaction cost
R  Equipment such as lifts and air
conditionally, generally part of the
fair value of investment property.
L  Office lease under furnished basis,
E fair value included the fair value of
Fair Value of the furnished items.
A Right of Use
S
E

CHANGE OF MEASUREMENT MODEL

 If the FV can no longer be

estimated reliably on a continuing
basis, such property should use
the cost method until disposal,
moreover the remaining property
should still be under FAIR VALUE.

CHANGE OF USE

When the  Transfer from investment

property meets, ceases property to owner occupied.
to meet, the definition  Transfer from investment
of investment property property to inventory.
and there is an  Transfer from owner occupied to
evidence of transfer a investment property.
property to, or from,  Transfer from inventory to
investment property. investment property.
Management
intention is not
suggicient evidence
of change of use.
 MEASUREMENT GUIDANCE ON CHANGE OF USE

1. When the entity uses the COST MODEL, transfers between

investment property, owner-occupied and inventory shall be
made at CARRYING AMOUNT.

2. Transfer from Investment Property (FV) to Owner Occupied or

Inventory, the Fair Value becomes the COST for subsequent
accounting.

3. Transfer from Owner-Occupied to Investment Property (FV). The

difference between carrying amount and the fair value shall be
accounted for as REVALUATION of PPE.

4. If an inventory is transferred to Investment Property (FV), Fair

Value remeasurement shall be included in profit or loss.

5. When investment property (under construction) is completed and

to be carried at fair value, the difference between the fair value
and carrying amount shall be included in profit or loss.

Credit for the photo:

https://mydecorative.com/5-reasons-why-you-should-choose-property-investment/