IAS/PAS 40 INVESTMENT PROPERTY

Land or building, or both held by the OWNER or LESSEE under FINANCE LEASE to earn RENTALS
or CAPITAL APPRECIATION. E.g. Long term capital Appreciation, Currently undetermined use, held by
an entity under finance lease, then, leased out under operating lease (sublease), leased out under
operating lease

Owner With Rental Owner With

IAS/PAS 16 (SIGNIFICANT portion)
occupied (PPE, Income occupie Rental
PAS 16) (PAS40) d Income
**IAS/PAS 40 (OWNER OCCUPIED INSIGNIFICANT)

I. INITIAL RECOGNITION @ COST

II. SUBSEQUENT MEASUREMENT

• PPE measurement per CLASS. In Investment Property all are measured using one model
only except if using Fair Value and it cannot be reliably determined in a continuing basis.

A. COST MODEL

= Cost- Accumulated Depreciation-Accumulated Impairment

• Fair Value of the asset is DISCLOSED

B. FAIR VALUE MODEL (encouraged by PAS)

• Reported every B/S @ Fair Value

• GAIN/LOSS recognized in PROFIT/LOSS

• TRANSACTION COSTS and OTHER DISPOSAL COST are NOT DEDUCTED.

• NO depreciation EXCEPT if the FAIR VALUE CANNOT BE RELIABLY determined on a

CONTINUING BASIS / on an ONGOING BASIS, the entity shall measure that investment
property using COST MODEL. REMAINING Investment property shall be measured
using the FAIR VALUE.

• REQUIRED when an entity chooses to classify property held by a LESSEE under

OPERATING LEASE as an investment property.

III. TRANSFERS TO AND FROM OTHER CLASSIFICATIONS

A. COST MODEL

• NO change in carrying amount. Therefore, no gain or loss.

B. FAIR VALUE MODEL

• Change in Fair Value taken to PROFIT/LOSS except if from OWNER OCCUPIED.

• Reclassification from OWNER OCCUPIED to Investment Property @ FV:

- FV > CV

Land Held as Investment Property xx

Land xx
Revaluation Surplus xx
 - FV < CV
Land Held as Investment Property xx
Revaluation Surplus (Equity)/ Revaluation Surplus( P/L) xx

Land xx

• Any further excess is charged to a LOSS taken to PROFIT/ LOSS.