INVESTMEN
T
PROPERTY
– IAS 40
1. INTRODUCTION
- Usually non-current assets held for a period of time for returns om investment, capital
appreciation or both
2. RECOGNITION
- If it meets the asset definition and recognition criteria
CONTROLLED OWNERSHIP OVER LEGAL OWNERSHIP:
- Control is sufficient even if legal ownership is not attained
OWNERSHIP OCCUPIED vs INVESTMENT PROPERTY:
- Held in use in the production process or for admin purposes (PPE)
- Intention is to earn income/capital appreciation (Investment property)
- Investment property = FV model (No deprecation)
- FV adjustments = profit and loss
DUAL PURPOSE:
- If one can split property clearly, recognise part PPE and part investment property
- If a distinction cannot be made then the asset is investment property if owner
occupancy is insignificant
- Property with underdetermined purpose = Investment property
ANCILLARY SERVICES:
- Classification based on significance of services
- If service form part of business intention for building, for examples a B&B, then it is
significant
- If the services are not a major business element, it is insignificant and is Investment
property
RECOGNISING INVESTMENT PROPERTY
- Recognise at cost
- If deferred payment use PV
- Nominal repairs are expensed
- Improvements capitalised
T
PROPERTY
– IAS 40
1. INTRODUCTION
- Usually non-current assets held for a period of time for returns om investment, capital
appreciation or both
2. RECOGNITION
- If it meets the asset definition and recognition criteria
CONTROLLED OWNERSHIP OVER LEGAL OWNERSHIP:
- Control is sufficient even if legal ownership is not attained
OWNERSHIP OCCUPIED vs INVESTMENT PROPERTY:
- Held in use in the production process or for admin purposes (PPE)
- Intention is to earn income/capital appreciation (Investment property)
- Investment property = FV model (No deprecation)
- FV adjustments = profit and loss
DUAL PURPOSE:
- If one can split property clearly, recognise part PPE and part investment property
- If a distinction cannot be made then the asset is investment property if owner
occupancy is insignificant
- Property with underdetermined purpose = Investment property
ANCILLARY SERVICES:
- Classification based on significance of services
- If service form part of business intention for building, for examples a B&B, then it is
significant
- If the services are not a major business element, it is insignificant and is Investment
property
RECOGNISING INVESTMENT PROPERTY
- Recognise at cost
- If deferred payment use PV
- Nominal repairs are expensed
- Improvements capitalised
