IFRS- investment property Flashcards
Which reasons for owning property can justify designating the property as investment property?
Holding building or land either to earn rental income or for capital appreciation can justify designating the property as investment property
Which, if either, of the following statements concerning investment property is/are correct?
I. A part of a building may be investment property, while the other part is not investment property.
II. Property leased between affiliated entities cannot be reported as investment property in consolidated statements.
a part of a building may be investment property, while the other part is not investment property, if the two parts of property can be separately sold or rented and if the other requirements of investment property are met. It also is correct that property leased between affiliated entities cannot be reported as investment property in consolidated statements because, at the consolidated level, the leased property would be owner-occupied.
Which, if any, of the following statements concerning disclosures related to investment property is/are correct?
I. When the fair value method is used, the entity must disclose whether or not a qualified independent party provided valuations.
II. When the cost method is used, the entity must still disclose fair value of investment property.
Both Statement I and Statement II are correct. When the fair value method is used to measure investment property, the entity must disclosed whether or not a qualified independent party provided valuations, (Statement I) and when the cost method is used to measure investment property, the entity must disclose fair value of investment property (Statement II).
Which of the following methods, cost or fair value, used to measure and report investment property will require disclosure of a reconciliation showing the causes of changes in the carrying amounts of investment property, between the beginning and end of a period?
When either the cost method or the fair value method is used to measure investment property; the entity must provide a reconciliation showing the causes of changes in the carrying amounts of investment property between the beginning and end of a period.
If property is transferred from another category to investment property because of a change in use of the property, which of the following cases can result in the recognition of a gain or loss on the transfer?
I. Investment property is measured and reported at cost.
II. Investment property is measured and reported at fair value.
Statement II is correct, but statement I is not correct. When property is transferred from another category into investment property measured at fair value, the old category will be based on cost and the new category (investment property) will be based on fair value. Any difference between the old cost-based carrying value and the new fair value will result in a gain or loss (statement II). When property is transferred from another category into investment property measured at cost, the cost-base carrying amount from the old category is the amount at which the asset is recorded in the new category and no gain or loss is recognized on the transfer (Statement I).
Which methods may be used to measure and report investment property?
Investment property may be measured using either the fair value method (model) or the cost method (model). Whichever method is selected must be used in accounting for all the investment property of an entity.
