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INVESTMENT PROPERTY (PAS 40) PARTLY INVESTMENT AND PARTLY OWNER-OCCUPIED
INVESTMENT PROPERTY is defined as If these portions could besold or leased out separatelyan entity:
● property which island or buildingorpart of a buildingor both ● Y ES: shall account the portions separately as investment
propertyandowner-occupied property.
● held by an owner or by the lessee under a finance lease
● N
O: the property is investment property,ifonlyaninsignificant
● to earn rentals or for capital appreciation or both. portion is held for manufacturing or administrative purposes.
An investment property isNOT HELD henancillaryservices(anadditionalservicethatispurchasedalongside
W
amainservice,oftenofferedasabonusoradd-onpurchase,ratherthan
● F or use in the production or supply of goods or services or for
reducingthepriceofthemainsservice)areprovidedbytheentitytothe
administrative purposes (owner-occupied property i.e. Property,
occupants of the property and these services are
Plant and Equipment - PPE)
● a relatively insignificant component of the arrangement, the
● For sale in the ordinary course of business (inventory)
property is treated asinvestment property
EXAMPLE OF INVESTMENT PROPERTY
● a moresignificantcomponentofthearrangement,thepropertyis
a . L and held for long-term capital appreciation treated asowner-occupied property
b. Land held for a currently undetermined use
PROPERTY LEASED TO AN AFFILIATE
c. Building owned by the reporting entity leased out under an
operating lease F rom the perspective of the individual entity that owns it, theproperty
d. Building that is vacant but is held to be leased out under an leased to another subsidiary or its parent is considered an investment
operating lease property.(individual/separate financial statement)
e. Propertythatisbeingconstructedordevelopedforfutureuseas
investment property F rom the perspective of the group as a whole and for purposes of
consolidated financial statements, the property is treated as
owner-occupied property.
INTERMEDIATE ACCOUNTING 2 (ACG010)
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MEASUREMENT MEASUREMENT OF TRANSFERS
● I NITIAL MEASUREMENT: COST (purchase price + directly 1. W
hen the entity uses the cost model, transfers between
attributable costs) investment property, owner-occupied property and inventory
shall be made atcarrying amount.
● SUBSEQUENT MEASUREMENT (APPLIED TO ALL):
2. A
transfer from investment property carried at fair value to
○ C ost Model (Cost - Accumulated Depreciation - owner-occupied property or inventory shall be accounted forat
Impairment) fair value, which becomes the deemed cost for subsequent
○ F air Value Model (Fair value, with changes in fair value accounting.
recognized in P/L) 3. Ifowner-occupiedpropertyistransferredtoinvestmentproperty
thatistobecarriedatfairvalue,thedifferencebetweenthefair
TRANSFERS OF INVESTMENT PROPERTY
valueandthecarryingamountofthepropertyshallbeaccounted
T ransfers to and from investment property shall made when and only for asrevaluationof property, plant, and equipment.
when there is achange of useevidenced by:
4. Ifaninventoryistransferredtoinvestmentpropertythatistobe
a. C ommencement ofowneroccupationordevelopmentwithview carried at fair value, the remeasurement to fair value shall be
to owner-occupation - transfer from investment property to included in profit or loss.
owner-occupied property.
5. W
hen an investment property under construction is completed
b. C ommencement of development with a view to sale - transfer andtobecarriedatfairvalue,thedifferencebetweenfairvalue
from investment property to inventory. and carrying amount shall be included in profit or loss.
c. E ndofowneroccupation-transferfromowner-occupiedproperty
to investment property.
d. Inception of an operating leasetoanotherentity-transferfrom
owner-occupied property to investment property
INTERMEDIATE ACCOUNTING 2 (ACG010)
