ias40 Flashcards
What does IAS 40 stand for?
International Accounting Standard 40
True or False: IAS 40 applies to investment property.
True
What is the primary objective of IAS 40?
To prescribe the accounting treatment for investment property.
Fill in the blank: IAS 40 requires investment property to be measured using the ______ model or the cost model.
fair value
What is considered investment property under IAS 40?
Property held to earn rentals or for capital appreciation.
Multiple Choice: Which of the following is NOT considered investment property according to IAS 40? A) Land B) Owner-occupied property C) Building leased to others
B) Owner-occupied property
True or False: Under IAS 40, investment property can be classified as held for sale.
False
What is the fair value model in IAS 40?
A model where investment property is measured at fair value with changes recognized in profit or loss.
Fill in the blank: The cost model under IAS 40 requires investment property to be measured at ______ less accumulated depreciation.
cost
What types of property are excluded from IAS 40?
Owner-occupied property, property held for sale in the ordinary course of business, and biological assets.
Multiple Choice: Which of the following is a criterion for recognizing investment property? A) The property is used for administrative purposes B) The property generates cash flows C) The property is leased to employees
B) The property generates cash flows
What is the definition of ‘investment property’ according to IAS 40?
Property (land or a building) held to earn rentals or for capital appreciation or both.
True or False: Under IAS 40, investment properties are subject to impairment testing.
True
What are the two measurement models for investment property under IAS 40?
Fair value model and cost model.
Fill in the blank: Under IAS 40, an entity must disclose the ______ of investment property.
fair value
Multiple Choice: Which of the following is required under the fair value model? A) Annual revaluation B) Only when there is an indication of impairment C) No requirement for revaluation
A) Annual revaluation
What should be included in the cost of an investment property?
Purchase price, transaction costs, and any directly attributable expenditures.
True or False: Investment properties can be reclassified to owner-occupied property.
True
Fill in the blank: An entity must assess whether an investment property is ______ at the end of each reporting period.
fairly valued
What disclosures are required for investment properties under IAS 40?
Fair value, rental income, direct operating expenses, and the method of valuation.
Multiple Choice: Which of the following is NOT a direct operating expense of investment property? A) Property management fees B) Depreciation C) Repairs and maintenance
B) Depreciation
What is the difference between investment property and property, plant, and equipment?
Investment property is held for rental income or capital appreciation, while property, plant, and equipment is used in the production or supply of goods and services.
True or False: The cost model allows for the revaluation of investment property.
False
Fill in the blank: Changes in fair value of investment property are recognized in ______ under the fair value model.
profit or loss
What is considered a change in use of investment property?
When the property is reclassified from investment property to owner-occupied or vice versa.
Multiple Choice: Which of the following is NOT a criterion for classifying a property as investment property? A) Income generation B) Capital appreciation C) Owner occupation
C) Owner occupation
True or False: An entity can choose to apply the fair value model for some investment properties and the cost model for others.
True
What is the effective date of IAS 40?
January 1, 2001
Fill in the blank: An entity must apply IAS 40 consistently to ______ investment properties.
all
What is the primary benefit of using the fair value model?
It provides more relevant information about the current value of investment properties.
Multiple Choice: Which of the following is an example of investment property? A) A factory building B) An office building rented out to tenants C) A personal residence
B) An office building rented out to tenants
True or False: IAS 40 requires investment property to be recognized at cost only.
False
What is the treatment of investment property when it is disposed of?
The investment property is derecognized, and any gain or loss is recognized in profit or loss.
