Initial and subsequent measurement of investment property

Initial measurement

According to pas 40

An investment property is initially measured at cost.

But cost means many things. Depende kung ikaw yung owner o yung lessee under a finance lease

Owner – Purchase price + directly attributable cost

Yung cost means kung sakaling ikaw yung owner it means the purchase price (kung magkano mo binili
yung investment property) plus directly attributable cost (measn yung mga cost na necessary para ma
acquire yung investment property)

Lessee under a finance lease – Right of use asset

Pero kung ikaw naman yung lessee under a finance lease nag kecreate ka ng asset na tinatawag na right
of use asset.

The right of use asset is initially recognized at cost which includes the following:

A. The present value of the lease payment

B. Lease payment made to the lessor at or before the commencement date less any lease incentive
- Yung letter A & B is same lang naman ng concept yun sa purchase price ang kaibahan lang
hindi ka naman talga buminili but rather yung nilalabas mong pera is thru lease payment.
So sabi nga sa A present value of the lease payment so aprang purchase price narin yon

And yung Letter B naman is lease payment parin ang kaibihan ngalang Yung letter A ginawa mo yung
bayad during the lease term while yung letter B naman ginawa mo yung lease payment at or before
commencement date pero nonetheless iisa parin yung concept part parin sya ng purchase price yung
timing lang magkaiba

C. Initial direct cost incurred by the lessee

Syarin naman yung direcltly attributable cost
D. Estimate of cost dismantling and restoring the underlying asset for which the lessee has a
present obligation.
And yung pang huli eto lang yung medyo nadagdag kasi pag nangungupahan ka hind isa lahat ng
pagkakataon kahit finance lease ay nagiging sayo yung asset hanggang dulo but rather may
instances na sinasauli mo din at pag ibabalik na may pagkakataon na nararapat lang na ibalik ng
maayos. Meaning lang non may ginawa kang kakaiba duon sa property and ang sabi na
kailangan mong ibalik duon sa original na itsura nya meaning lang non may kaialngan kang gawin
kaialngan mong gumastos ang tawag duon is dismantling cost. Part rin sya ng cost initially kasi
nga kung may present obligation ka duon kailangan mor in syang bayaran.
So ano naman yung cost na maaring mangyari sa simula ero hindi naman sya cinacapitalize. Hindi
nagiginga part ng cost ng asset

Cost excluded from cost of investment property

A. Start-up cost, unless necessary to bring the property to the condition necessary for its intended
use
- So example meron kang I lelease na property and nag karoon ng celebration for example
ribbon cutting. Hindi mo sya I cacaptialize as cost of asset kasi hindi sya necessary.
B. Operating losses incurred before the investment property achieves the planned level of
occupancy
- Hindi rin kina capitalize yung Operating losses. So example nalang nun is May paupahan ka
then walang nagugupahan sa simula. Hindi mo ma hit yung desired level of occupancy pero
nag kakaroon ka ng ancillary services like maintenance ng property or nag hire ka ng security
guard syempre Swineswelduhan mo sila. Dahil nga walang nagugupahan or akkaunti pa,
maaring mag karoon ka ng losses or operating losses. Syempre Hindi mo sya I cacapitalize
yung mga losses nayon ahabnga dipa namemeet yung desired level of occupancy.

C. Abnormal amounts of waster material, labor or other resources incurred in constructing or

developing the property.
- By the term itself duon palang alam mo na hindi sya cinacapitalize because the cost is
abnormal. For example may dinedevelope kang investment property basically nagkakaroon
yang ng materials, labor, and other overhead expenses. Let’s say nag kamali ng Bili ng
materials or nagkaroon ng accident, management ang responsible duon, hindi dapat mag
suffer yung mismong property in a sense na pinapataaas mo yung value dahil sa
abnormalities na yon.

So again, they’re excluded in the cost of the property initially