ACCOUNTING FRAMEWORK &

INVESTMENT PROPERTY AND

PROPERTY PLANT & EQUIPMENT
(PPE)

BY GROUP 3:
JASMER EN PADI LLA
EMERY PUNO
BENJI E R IOBO CA
INVESTMENT PROPERTY

-D E F I N E D A S A N I M M O VA B L E P R O P E R T Y
(LAND OR BUILDING) HELD BY OWNER TO
EARN R E N TA L S OR FOR C A P I TA L
A P P R E C I AT I O N O R B O T H , R A T H E R T H A N F O R :
•U S E I N T H E P R O D U C T I O N O R S U P P LY O F
GOODS AND S E RV I C E S OR FOR
A D M I N I S T R AT I V E P U R P O S E S , O R
•S A L E IN THE O R D I N A RY COURSE OF
B U S I N EESSX.A M P L E S :
L A N D HELD FOR LONG-TERM C A P I TA L
APPRECIATION
L A N H E L D F O R A C U R R E N T U N D E T E R M I N E D
USE
B U I L D I N G O W N E D T H AT L E A S E D O U T U N D E R
A N O P E R AT I O N L E A S E
V A C A N T B U I L D I N G B U T H E L D T O B E L E A S E D
O U T U N D E R O P E R AT I N G L E A S E
 INITIAL MEASUREMENT UNDER FULL
PFRS, PFRS FOR SME’S & SE:
•T R A N S A C T I O N A L PRICE +
TRANSACTIONAL COST (DIRECT
AT T R I B U T A B L E E X P E N D I T U R E )
FULL PFRS PFRS FOR PFRS FOR SE
SMES IF ENTITY WILL
There is an Fair Value There is an CHOOSE :
option to use: Model unless option to use:
SUBSEQUENT
MEASUREMEN - Cost Model fair value is - Cost • COST MODEL –
T - Fair Value not available. Model MEASURE ALL ITS
Model - Fair Value INVESTMENT
Model P R O P E RT I E S IN
ACCORDANCE WITH
PPE (COST –
A C C U M U L AT E D
D E P R E C I AT I O N –
I M PA I R M E N T L O S S )

• F A I R VA L U E M O D E L -
Sample Problem:

A B C C O M PA N Y O W N E D F O U R P R O P E RT I E S , W I T H
THE USEFUL LIFE OF 10 YEARS.
Property Initial Cost FV - 12/31/22 FV - 12/31/23

Land for undetermined use 2,000,000 2,300,000 2,800,000

Building (operating lease) 4,000,000 2,800,000 2,400,000

Building (finance lease) 3,000,000 2,500,000 2,200,000

Land for capital appreciation 4,600,000 4,000,000 3,900,000

Sample Problem:

REQUIREMENTS:

COMPUTE FOR THE GAIN OR LOSS TO BE

RECOGNIZED OF THE INVESTMENT
P R O P E RT I E S I N 2 0 2 2 .
I N C O M PA R I S O N W I T H T H E F U L L P F R S , P F R S
FOR SMES, AND PFRS FOR SE.
Sample Problem:

A B C C O M PA N Y O W N E D F O U R P R O P E RT I E S , W I T H
THE USEFUL LIFE OF 10 YEARS.
Property Initial Cost FV - 12/31/21 FV - 12/31/22

Land for undetermined use 2,000,000

YES 2,300,000 2,800,000

Building (operating lease) 4,000,000

YES 2,800,000 2,400,000

Building (finance lease) 3,000,000

NO
2,500,000 2,200,000

Land for capital appreciation 4,600,000

YES 4,000,000 3,900,000
 GAIN OR LOSS TO BE
RECOGNIZED IN 2022
Property Initial Cost FV - FV - Gain/ (Loss)
12/31/21 12/31/22

Land for 2,000,000 2,300,000 2,800,000

500,000
undetermined use
Building (operating 4,000,000 2,800,000 2,400,000
lease) (400,000)

Land for capital 4,600,000 4,100,000 3,900,000

appreciation
(200,000)

(100,000)
FAIR VALUE MODEL
100,000 loss
 GAIN OR LOSS TO BE
RECOGNIZED IN 2022
Property Initial Cost FV - FV - Gain/ (Loss)
12/31/21 12/31/22

Land for 2,000,000 2,300,000 2,800,000 500,000

undetermined use
Building (operating 4,000,000 2,800,000 2,400,000 (400,000)
lease)
Land for capital 4,600,000 4,100,000 3,900,000 (200,000)
appreciation

(100,000)
COST MODEL FAIR VALUE MODEL
None 100,000 loss

Full PFRS SME

& SE
PROPERTY PLANT & EQUIPMENT (PPE)
FULL PFRS PFRS FOR SMES PFRS FOR SE

INITIAL At cost At cost At cost

MEASUREMEN
T

An entity shall choose either cost An entity shall choose An entity shall choose
model or revaluation model as either cost model or either cost model or fair
accounting policy and shall apply to revaluation model as value model as
SUBSEQUENT
an entire PPE. accounting policy and accounting policy and
MEASUREMEN
T shall apply to an entire shall apply to an entire
 Cost model (Cost less PPE. PPE.
accumulated depreciation and
impairment losses)
 Revaluation model (Fair value
less accumulated depreciation and
impairment losses)
 FULL PFRS PFRS FOR SMES PFRS FOR SE

RESIDUAL The residual value and the useful Review only if there is an indication Should be reviewed only if
VALUE life of an asset must be reviewed at that there has been a significant there are indicators that it has
least at each fiscal year change since the last annual changed since the most recent
reporting date annual reporting date.
DEPRECIATON Review depreciation method, Depreciation amount shall be Review depreciation method,
AMOUNT, residual value, and useful life at allocated on a systematic basis over residual vale, and useful life
METHOD, least at each annual reporting date useful life. Depreciation charge for should be reported in profit
DEPRECIATION
PERIOD and amended if expectations differ each period should be recognized in and loss
from previous estimates. profit and loss
DERECOGNITIO An entity shall derecognize an
N items of PPE:
(a) On disposal; or SAME AS FULL PFRS SAME AS FULL PFRS
(b)When no future economic
benefits are expected from its
use of disposal
 FULL PFRS PFRS FOR SMES PFRS FOR SE

For each class of PPE, disclose: For each class of PPE, disclose: For each class of PPE, disclose:
 Basis for measuring carrying  Basis for measuring carrying amount  Basis for measuring carrying
amount amount
 Depreciation methods used
 Depreciation methods used  Depreciation methods used
 Useful lives or depreciation rates
DISCLOSUR  Useful lives or depreciation rates  Useful lives or depreciation rates
ES  Gross carrying amount, accumulated
 Gross carrying amount, depreciation and impairment loss  Gross carrying amount,
accumulated depreciation and accumulated depreciation and
impairment loss  Reconciliation of the carrying impairment loss
amount (beginning & ending period)
 Reconciliation of the carrying  Reconciliation of the carrying
amount (beginning & ending amount (beginning & ending
period) period)
 ACCOUNTING TREATMENT OF INVESTMENT PROPERTY/PPE
COST MODEL FAIR VALUE MODEL REVALUATION MODEL

INITIAL At cost At cost At cost

MEASUREMENT

SUBSEQUENT Cost less Accumulated Fair Value Fair Value or Sound Value or
MEASUREMENT Depreciation and Impairment Depreciated Replacement Cost
losses less Accumulated
Depreciation and Impairment
losses

DEPRECIATION YES NONE YES

Yes, if the Book Value > NONE Yes, if the Book Value >
IMPAIRMENT LOSS Recoverable Amount Recoverable Amount

GAIN OR LOSS ON NONE YES NONE

CHANGES IN FV

REVALUATION NONE NONE Yes, if Revalued Amount >

SURPLUS Book Value to be presented in
OCI without RA
THANK YOU
AND
GOD BLESS