INVESTMENT PROPERTY (IAS 40)
Investment property
Is land or a building (including part of a building) or both that is: held to earn rentals or
for capital appreciation or both.
Not owner-occupied; not used in production or supply of goods and services, or for
administration; and. not held for sale in the ordinary course of business.
Examples of investment property: [IAS 40.8]
Land held for long-term capital appreciation
Land held for a currently undetermined future use
Building leased out under an operating lease
Vacant building held to be leased out under an operating lease
Property that is being constructed or developed for future use as investment property
The following are not investment property and, therefore, are outside the scope of IAS 40:
[IAS 40.5 and 40.9]
Property held for use in the production or supply of goods or services or for
administrative purposes
Property held for sale in the ordinary course of business or in the process of
construction of development for such sale (IAS 2 Inventories)
Property being constructed or developed on behalf of third parties (IAS 11 Construction
Contracts)
Owner-occupied property (IAS 16 Property, Plant and Equipment), including property
held for future use as owner-occupied property, property held for future development
and subsequent use as owner-occupied property, property occupied by employees and
owner-occupied property awaiting disposal
Property leased to another entity under a finance lease
Recognition
Investment property should be recognized as an asset when it is probable that the future
economic benefits that are associated with the property will flow to the entity, and the cost of
the property can be reliably measured. [IAS 40.16]
Initial measurement
Investment property is initially measured at cost, including transaction costs. Such cost should
not include start-up costs, abnormal waste, or initial operating losses incurred before the
investment property achieves the planned level of occupancy. [IAS 40.20 and 40.23]
Measurement subsequent to initial recognition
IAS 40 permits entities to choose between: [IAS 40.30]
Fair value model
Cost model.
NB. One method must be adopted for all of an entity's investment property. Change is permitted only if
this results in a more appropriate presentation.
BY MR MARUCHA 0713-754-954 1
Investment property
Is land or a building (including part of a building) or both that is: held to earn rentals or
for capital appreciation or both.
Not owner-occupied; not used in production or supply of goods and services, or for
administration; and. not held for sale in the ordinary course of business.
Examples of investment property: [IAS 40.8]
Land held for long-term capital appreciation
Land held for a currently undetermined future use
Building leased out under an operating lease
Vacant building held to be leased out under an operating lease
Property that is being constructed or developed for future use as investment property
The following are not investment property and, therefore, are outside the scope of IAS 40:
[IAS 40.5 and 40.9]
Property held for use in the production or supply of goods or services or for
administrative purposes
Property held for sale in the ordinary course of business or in the process of
construction of development for such sale (IAS 2 Inventories)
Property being constructed or developed on behalf of third parties (IAS 11 Construction
Contracts)
Owner-occupied property (IAS 16 Property, Plant and Equipment), including property
held for future use as owner-occupied property, property held for future development
and subsequent use as owner-occupied property, property occupied by employees and
owner-occupied property awaiting disposal
Property leased to another entity under a finance lease
Recognition
Investment property should be recognized as an asset when it is probable that the future
economic benefits that are associated with the property will flow to the entity, and the cost of
the property can be reliably measured. [IAS 40.16]
Initial measurement
Investment property is initially measured at cost, including transaction costs. Such cost should
not include start-up costs, abnormal waste, or initial operating losses incurred before the
investment property achieves the planned level of occupancy. [IAS 40.20 and 40.23]
Measurement subsequent to initial recognition
IAS 40 permits entities to choose between: [IAS 40.30]
Fair value model
Cost model.
NB. One method must be adopted for all of an entity's investment property. Change is permitted only if
this results in a more appropriate presentation.
BY MR MARUCHA 0713-754-954 1
