Flashcards IAS 40
IAS 40 - what is the scope
1 What :
land, buildings ->Immovable Assets
2 Held as :
1 owner or
2 lessee (right of use asset)
3 Purpose :
For collecting
1 rentals and/or
2 longterm capital appreciation
3 undetermined future use
4 Excluded :
1 Owner occupied, eg. use for production or administration (IAS 16)
2 Leased as Finance Lease to another entity
3 Sale in ordinary course of business (IAS 2)
(entity developed criteria to delimit)
4 Biological assets (IAS 41)
5 Mineral rights + reserves
IAS 40 - How to distinguish owner occpied or investment property ?
Mixed Use :
Owner occupied part can be separated
(i) yes -> separation is required
(ii) no -> inv prop only if non-qualifying part insignificant
Owner occupied :
1-current or held for future occupation by entity
2-occupied by employee(s) regardless
3-significant ancillary services (eg owner-managed hotel)
4-Occupied by a sub in Conso FS (not sep FS)
5-Owner occupied awaiting disposal
IAS 40 - when are inv prop initially recognised
When
1 it is probable that future eco benef will flow to entity
2 cost can be reliably measured
IAS 40 - what is included + how is inv prop initially measured ?
1 At cost + directly attributable acqusition cost
2 No startup cost, operating losses, abnormal waste
3 pmt w/non-monetary item :
if reliably measureable, FV of
(i) Asset given up, if not
(ii) Asset received, if not
(iii) carrying amt of asset given up
Reliably measureable = variability of amt + timing not significant
IAS 40 - how are inv prop subs measured ?
Class of inv properties :
Class 1 : inv prop held to cover liabs (insurance contracts)
Class 2 : all other
Policy choice appl to entire class :
1 - FV model FVTOPL (no depr)
2 - Cost model
if held for sale -IFRS 5
if RoU Asset - IFRS 16
all other - IAS 16
IAS 40 - how is the FV model applied ?
FV model
1 No depreciation
2 FV variations recog in PL
3 Not reliably measureable :
Only on initial recogn : -> apply cost model until it becomes reliably measureable on a continous basis
Subsequently : continue FV even if market trans less frequent. Only switch to cost model is no longer possible
IAS 40 - how is the COST model applied ?
Measured at cost in accordance with
IFRS 5 Held for sale
IFRS 16 for RoU assets
IAS 16 in all other cases
IAS 40 - what are the conditions for a transfer in/out of investment properties ?
Only if
1-there is a change in use
2-evidence of the change exists, eg :
commence/end or development for owner occup
developm for sale (-> inventory)
start of operating lease
3-intended disposal w/o development : kept as inv prop NOT moved to inventory
IAS 40 - how is a transfer from owner occupied to invest prop at FV recorded :
Leased or owned : apply revaluation model per IAS 16 - Revaluation surplus in OCI before the transfer to inv prop. No reclass (recycling) to PL upon disposal
IAS 40 - how is a transfer from inventory to invest prop at FV recorded :
Any difference recognised in PL
IAS 40 - when are compensation from third parties for impaired, lost or given up inv prop recognised ?
When compensation becomes receivable (rather than if it is virtually certain to be received)
IAS 40 - what are the general disclosures
1 Valuation model applied
2 Policy criteria to distinguish owner-occupied property (if difficult)
3 extent of FV relying on indep qualified + experienced valuer
4 PL
a rented prop : income + related direct operating expenses
b non-rented prop : direct operating exp
c cum gain/loss from trsfrt of cost model to FV model
5 restrictions on realisation, remittance of proceeds upon disposal
6 obligations to purchase, construct, develop, repair, maintain, enhancements
IAS 40 - FV model disclosures
1 recon mvmts in carrying amounts
2 recon indep valuation to amount used in FS (to avoid double-counting for ex)
3 not reliably measurable :
- sep recon mvms in carrying amt
- descr, expl, range of FV estimate
- on disposal, carrying amt before sale + gain/loss
IAS 40 - Cost model disclosures
1 Depr methods
2 useful lives / depr rates
3 gross carrying amt + accum depr b/f + c/f
4 recon mvmt carrying amt
5 FV of inv prop or descr, expl why not possible + range of FV
