Investment Property

Question 1

Investment Property is…

Answer 1

A land or a building or a part of a building or both, held by the onwer under a finance lease to earn rentals and/or for capital appreciation.

Question 2

Partial own use:

If the portions can be sold or leased out separately…

Answer 2

They are accounted for separately.

Question 3

Partial own use:

If the portions cannot be sold or leased out separately…

Answer 3

The property is investment property ONLY IF the owner-occupied portion is insignificant.

Question 4

Ancillary Services

Answer 4

If the enterprise provides ancillary services to the occupants of a property held by the enterprise, the appropriateness of classification as investment property is determined by the significance of the services provided.

Question 5

If the Ancillary Services are a relatively insignificant component of the arrangement as a whole…

Answer 5

The enterprise may treat the property as investment property.

Question 6

When the ancillary services provided are more significant…

Answer 6

The property should be classified as owner-occupied.

Question 7

Investment propertty should be recognized as an asset when…

Answer 7

• It is probable that the future economic benefits that are associated with the property will flow to the enterprise.
• The cost of the property can be reliably measured.

Question 8

Initial Measurement of Investment Property:

Answer 8

Measured at Cost, including transaction cost.

Question 9

Subsequent measurement of Investment Properties:

Answer 9

May choose between:

• Fair value Model
• Cost Model

Question 10

Investment Property carried at Fair value TO Owner-occupied property or inventories

Answer 10

Fair value at the change of use is the “cost” of the property.

Question 11

Owner-occupied Property TO Investment property at fair vaule

Answer 11

Difference in carrying amount and fair value as revaluation under PAS 16.

Question 12

Inventories TO Investment Property at fair value

Answer 12

Difference in carrying amount and fair value is recognized in profit or loss.

Question 13

Investment property under construction TO Completed investment property that will be carried at fair value

Answer 13

Difference between the fair calue at the date of transfer and the previous carrying amount should be recognized in net protif or loss.

Question 14

Investment property under the cost model TO Owner-occupied property or inventories

Answer 14

No change in the carrying amount of the property transfered.