Investment Property

Question 1

Define Investment Property

Answer 1

land and building held by owner or operating lease to earn rentals or for capital appreciation

Question 2

Five options of investment property for land and/ building

Answer 2

• land held for long-term capital appreciation
• land held for currently undetermined use
• building leased out under operating lease
• building vacant but held for operating lease
• property being built for the purpose of investment property

Question 3

Overview of measurement criteria

Answer 3

Initial measurement: same as PPE
Subsequent measurement
-Cost: same as PPE
-Fair Value model: I.P is remeasured to fair value at each reporting period with the profit/loss going to p/l. No depreciation

Question 4

Principles of Investment property (9)

Answer 4

• All investment property should follow one measurement model
• Change from one measurement model to another is allowed but mostly from cost to FV
• If Fv cannot be reliably measured then the cost model should be used
• For cost model, all the other rules like dep and residual value must continue
• for a multipurpose building, if the building can be accounted for separately, then do that, if not, the space with the largest use, PPE or IV wins
• if significant ancillary services are provided to occupants, then its not an IV but a PPE
• if it is being rented by an employee, it is PPE
• rentals within a group is IV in individual accounts but PPE in the group account
• Transfers to IV from PPE