Investment Property

Question 1

What is investment property?

Answer 1

• Land and building only
• Held by either the owner or lessee under a finance lease for investment purposes:

1. For earning rentals
2. For capital appreciation through trading
3. Not for owner occupied purposes and or for sale in ordinary course of business

• Owner occupied properties are PPE
• Properties help for sale in the ordinary course of business will be considered as inventory

Question 2

Special consideration for Investment Properties

Answer 2

Special consideration 1:

• If the two portions of the property can be sold or leased separately, we need to separately account for PPE and investment property.
• If not, the asset should be treated as an investment property only if an insignificant portion is owner occupied.

Special consideration 2:
- If ancillary services are insignificant to the whole arrangement, the property will be treated as an investment property.

Passive investors only apply to hotel building.

Question 3

What are ancillary services?

Answer 3

Security and maintenance services

Question 4

Does all IP have no depreciation?

Answer 4

No! Only IP under the fair value model does not have depreciation.