except in the cases described in paragraph 53.When a property interest pls help Now the company has decided to use fair value model. S. Thank you Silvia, This Standard shall be applied in the recognition, measurement and disclosure of investment property. With the exceptions noted in paragraphs 32A and 34, an entity shall choose Further as per scope of IAS 16, the standard shall be applied in accounting for PPE except when another Standard requires or permits a different accounting treatment. And, even if you apply cost model, you still need the fair value for the disclosure purposes (because under cost model, you do NOT keep investment property at fair value!). So should all these be part of ias 40 or should these be treated separately under ias 16 and charge depreciation. for investment property under IAS 40 – yes, you do need to account for the change in fair value on a yearly basis. Both parent and subsidiary are in same line of the business. Although you need not be a member to ask questions or provide answers, we invite you to register an account and be a member of our community for mutual help. S. Hi Silvia Really appreciates your efforts..Can u please elaborate a little bit about subsequent treatment of “revaluation surplus” arising on transfer from IAS-16 (Cost Modal) to IAS-40(Fair Value Modal).. How such surplus shall be dealt with subsequently??? Can a hotel which is owned by the company be classified as an investment property ? explanation of why fair value cannot be measured reliably; and(iii) if This is why the International Accounting Standard 2 was issued and interpreted in a detailed way. while the company is having a lease land and on that land company constructed a building and rented that building. if investment property needs to be revalued frequently, however I cannot find anything of the sort. Say, we now have CV 12 and FV 9. property at fair value, it shall continue to measure the property at fair value currency, and on translation of a foreign operation into them presentation leased out under one or more operating leases. Fair value model Investment property is remeasured at fair value, which is the amount for which the property could be exchanged between knowledgeable, willing parties in an arm's length transaction. So how will we distinguish . Hi Liew, 2) Lets say an investment holding company owns an apartment building and some units are unsold, are these units under inventories and the accounting treatment must be in accordance to IAS 2? you recognize an investment property as an asset only if 2 conditions are met: Investment property shall be initially measured at cost, including the transaction cost. been no such valuation, that fact shall be disclosed. Can I assume that the initial measurement is depreciated under cost model since the fair value of the building is not given…. Can you please answer to one issue about non-current asset. Must I state there is a change in initial cost of the building? (ii) direct operating expenses (including repairs and maintenance) arising from purposes; the purpose also covers Rental and In Investment property also covering rentals.. The condo will complete in 2018 and hand over to the buyer. You can select the appropriate depreciation method if you do apply cost model instead of FV model. investment property shall be measured initially at its cost.,Transaction costs Thank you very much. Due to the misappropriation of inventory there was a need to guide the companies as to record the inventories properly. property to owner-occupied property;(b) commencement of development with a liabilities that are recognised as separate assets and liabilities as described accordance with IAS 36;(vi) the net exchange differences arising on the and on translation of a foreign operation into the presentation currency of the If building is given on rent then whether it will be classified under IAS 40 or IAS 16 . It wants to say that if you apply the fair value model (“revaluations are carried out every year”), then you do not depreciate. I know that the revaluation model under IAS 16 requires one to carry out a revaluation of property frequently so that the revalued amount is not materially different from the carrying amount. This is really very helpful.. Hi,very helpful.!Could you also explain what’s the difference between fair value model and revaluation model? the subsequent gains/loss will be routed through P/L. What if the company’s main activity is to earn rental income. Some of the positive aspects related to IAS 16 are: Thank you. Can you please let me know in such circumstances, would the plant and machinery given on lease be reclassified to “Asset Held for Investment” ( which was previously considered as Asset Held for Sale) at book value and effective the lease agreement should we start depreciating those assets. What if our main business is to earn rentals is the building should be classified as fix asset or IP. From which value wilI I present the investment property on the opening balance sheet, from cost? ABC applies IAS 40 Investment Property for tha accounting treatmen, due to the fact that these buildings and lands are hold for earning rentals and for capital appreciation. In this case, 10/40, or 1/4 will be treated as owner-occupied property under IAS 16 (i.e. Thanks. Dear Silvia, disposal group classified as held for sale in accordance with IFRS 5 and other IAS 40 Investment Property. Silvia, It will be really great if you also mention the exact reference in the SLFRS. IAS 40 notes that this is highly unlikely for a change from a fair value model to a cost model. The remaining 30/40 or 3/4 will be treated as investment property (75 – revalue to fair value each year, or cost model). Thank you for your insights. Is it IAS 16, IAS 40 or IFRS 5? After initial recognition, you have 2 choices for measuring your investment property (IAS 40.30 and following). apply that policy to all of its investment property.An entity may: statements) is based on a valuation by an independent valuer who holds a Measurement after recognitionAccounting policy Regards. Struggling with my assignment. 62 b (ii) of IAS 40. Say for example they occur every 5 years. fair value;(ii) the carrying amount of that investment property at the time . There is a rebuttable presumption that an entity can reliably measure the And, I don’t know the details of the arrangement, but if you keep your bond at amortized cost, then these transaction costs are not expensed in P/L immediately, but they are treated as a part of amortized cost/effective interest method. classification is difficult (see paragraph 14), the criteria it uses to Finance Dissertation topics in accounting include: The Growth of speculative stock investments: The explanations behind a continued advancement and its impacts on the UK ventures showcase. should we record it at its initial cost? Should this fair value be the process of converging from Local GAAP to IFRS 16 the is. Period of suspension I must transfer the carrying cost as FV was not reliably measurable ) of 1,100. 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