IAS 40 Investment Property (Under NCA in SoFP)

1) Definition
a. Investment property
: Is property (land or building – or part of a building or both) held (by the owner or by
the lessee under a financial lease) to earn rentals or for capital appreciation or both
rather than held as Property, plant, and equipment (Owner occupied) or as Inventory
(Held for trading).
2) Recognition
a. Probable future economic benefits will flow to the entity.
AND
b. It has a cost that can be measured reliably.
3) Measurement
a. Initial Measurement
- At cost
b. Subsequent Measurement (at each year end)
- Cost model
 At carrying value
- Fair value model
 At fair value
 Changes in fair value will be recognised in the P/L ( NOT the same as
revaluation reserve)
 Properties are NOT depreciated
4) Transfer
a. IAS 40 to IAS 16/ IAS 2
- Use the fair value at the date of change
b. IAS 2 to IAS 40
- Difference between carrying value and fair value will be recognised in the P/L
c. IAS 16 to IAS 40
- Difference between carrying value and fair value will be recognised in the
revaluation reserve (ie treat it as revaluation surplus or deficit)
- Subsequent years, changes in fair value will be recognised in P/L
5) Disposal
- Gain or Loss on disposal is recognised in the SoPL
6) Financial statement
a. SoPL
- Gain or loss on disposal
- Changes in fair value
- Depreciation (only for cost model)
b. SoFP
- Investment property shown as Non-current asset
- Revaluation shown under Equity
c. OCI
- Revaluation surplus