Investment Property

Question 1

Which accounting standard is Investment Property?

Answer 1

IAS 40

Question 2

Where does investment property get revalued to?

Answer 2

P/L

Question 3

Is there depreciation on investment property?

Answer 3

No

Question 4

What is the definition?

Answer 4

An investment property is a property which is rented out for its rental income and or capital appreciation. Investment property can include land, even land which is held for indeterminate use

Question 5

What is excluded from investment properties and what are the related standards?

Answer 5

• owner occupied properties (IAS 16)
• properties intended for sale (IAS 2)
• properties to which ancillary services provided, unless insignificant (guest house)

Question 6

At subsequent year end, what are the two methods for measuring investment property?

Answer 6

• Cost or FV

Question 7

If you measure at cost, what else do you need to do?

Answer 7

• disclose the FV of all assets in notes

Question 8

Can you change cost to FV and FV to cost?

Answer 8

You can change from cost to FV but not FV to cost

Question 9

Does this need to be applied to all or a proportion of investment property?

Answer 9

All

Question 10

Describe the two changes in use

Answer 10

• investment property to owner occupied: Cost is taken at FV at the date of change and depreciated
• owner occupied to investment property: apply IAS 16 up to the date of change then treat the difference of the carrying amount and fair value as a revaluation (one off Reval to OCI then P/L at subsequent year ends)

Question 11

Can land be considered an investment property?

Answer 11

Yes when held for indeterminate use

Question 12

How is Investment Property initially valued?

Answer 12

At cost

Question 13

Is a change in management’s intentions on its own evidence of an actual change in use?

Answer 13

No