Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 15

INVESTMENT PROPERTY (IAS 40)

1. OBJECTIVE

1.1 This Standard prescribes the accounting treatment for investment property and related disclosures.

1.2 This Standard does not apply to owner-occupied property, property held for sale in the ordinary course of business, or property that is leased to another entity under a finance lease or being constructed or developed on behalf of third parties.

2. SYNOPSIS OF THE STANDARD

The summary of this Standard that shall be applied in the recognition, measurement, and disclosure of investment property is presented here.

2.1 This Standard defines investment property as land or a building or a part of a building or both held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both.

2.2 An entity shall recognize an investment property when and only when

• It is probable that the expected future economic benefits will flow to the entity.
• The cost of the asset can be reliably measured.

2.3 Investment property is initially measured at cost. Cost will include the purchase price and any costs needed to prepare the asset for its intended use.

2.3.1 The initial cost of a property under lease that is classified as investment property shall be recognized at the lower of the fair value of the property and the present value of the minimum lease payments in accordance with International Accounting Standard (IAS) 17, Leases.

2.3.2 Subsequent to acquisition, investment properties can be valued either ...