IAS 40
● Fair value model
o No depreciation
o No impairment testing – The fair value adjustment already consider a
possible impairment
o All FV adjustments goes through profit and loss.
● IAS 40 and IFRS 16 also link together.
o If the company have a right to use an asset (IFRS 16) and then sub-lease
the asset (IAS 40)
● Classification as IP is NB.
o Land and/or buildings primarily held for
▪ Rental income and/or
▪ Capital Growth
● Fixed property – excluding
o Held for production/delivery of goods/services
o Admin Purposes
o Sale in ordinary course
● Par 7 – if the Property provide its own independent cash flows from other assets
– indication of IP as its held for lease income
● Par 8 – Examples of IP
● Par 9 – Examples of NON – IP
● Dual – purpose property
o Can you sell the parts separately or can you lease parts out separately ito
a finance lease? If YES, you account for them separately!
o Sectional title = means parts of the building can be sold separately for
example an apartment Block.
o Can you sell the parts separately or can you lease parts out separately ito
a finance lease? If NO, Look at the significance of each portion.
▪ If owner-occupied (IAS 16) portion is insignificant to full property =
account for as IAS 40
▪ If owner – occupied portion is significant to full property = account
for ito IAS 16
o Ancillary services – If:
, o insignificant = account for property as IP
o Significant? = account for owner-occupied ito IAS 16
o If a person own a hotel and manage as a hotel = IAS 16 – Par 12
o If a person own a hotel and lease hotel to third party that manage it as
hotel = owner account for as IP.
● Owned Investment Property.
o Recognition kriteria basically the same as IAS 16
o Initial measurement = Same as IAS 16
o Subsequent measurement: have a choice and must apply to all IP
▪ Cost model OR
● Same as IAS 16
● Depreciation and impairment testing
▪ Fair value model
● Restate to FV end of each year
● FV adjustments through profit and loss
● For Leased IP:
o Recognition in terms of IFRS 16 par 19A
o Initial measurement = same as IFRS 16
o Subsequent measurement: Have a choice and must be applied
consistently. Either
▪ Cost model OR
● Same as IFRS 16
● Depreciation and impairment testing
▪ Fair value model
● Restate to FV end of each year
● FV adjustments to Profit and loss
Subsequent measurement:
● Can you change from the FV model to Cost model or other way around?
o Change allowed ito IAS 8 if it gives môre reliable info
● Fair value model
o No depreciation
o No impairment testing – The fair value adjustment already consider a
possible impairment
o All FV adjustments goes through profit and loss.
● IAS 40 and IFRS 16 also link together.
o If the company have a right to use an asset (IFRS 16) and then sub-lease
the asset (IAS 40)
● Classification as IP is NB.
o Land and/or buildings primarily held for
▪ Rental income and/or
▪ Capital Growth
● Fixed property – excluding
o Held for production/delivery of goods/services
o Admin Purposes
o Sale in ordinary course
● Par 7 – if the Property provide its own independent cash flows from other assets
– indication of IP as its held for lease income
● Par 8 – Examples of IP
● Par 9 – Examples of NON – IP
● Dual – purpose property
o Can you sell the parts separately or can you lease parts out separately ito
a finance lease? If YES, you account for them separately!
o Sectional title = means parts of the building can be sold separately for
example an apartment Block.
o Can you sell the parts separately or can you lease parts out separately ito
a finance lease? If NO, Look at the significance of each portion.
▪ If owner-occupied (IAS 16) portion is insignificant to full property =
account for as IAS 40
▪ If owner – occupied portion is significant to full property = account
for ito IAS 16
o Ancillary services – If:
, o insignificant = account for property as IP
o Significant? = account for owner-occupied ito IAS 16
o If a person own a hotel and manage as a hotel = IAS 16 – Par 12
o If a person own a hotel and lease hotel to third party that manage it as
hotel = owner account for as IP.
● Owned Investment Property.
o Recognition kriteria basically the same as IAS 16
o Initial measurement = Same as IAS 16
o Subsequent measurement: have a choice and must apply to all IP
▪ Cost model OR
● Same as IAS 16
● Depreciation and impairment testing
▪ Fair value model
● Restate to FV end of each year
● FV adjustments through profit and loss
● For Leased IP:
o Recognition in terms of IFRS 16 par 19A
o Initial measurement = same as IFRS 16
o Subsequent measurement: Have a choice and must be applied
consistently. Either
▪ Cost model OR
● Same as IFRS 16
● Depreciation and impairment testing
▪ Fair value model
● Restate to FV end of each year
● FV adjustments to Profit and loss
Subsequent measurement:
● Can you change from the FV model to Cost model or other way around?
o Change allowed ito IAS 8 if it gives môre reliable info
