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INVESTMENT PROPERTY
This material is the property of Department of Accounting and Finance, CoBE, AAU.
Permission must be obtained from the Department prior to reproduction 1
100 General Principles
200 Presentation
300 Assets
400 Liabilities
500 Equity
600 Revenue
700 Expenses
800 Broad Transactions
900 Industry
2
100 General Principles
105 Generally Accepted Accounting Principles
200 Presentation
205 Presentation of Financial Statements
210 Balance Sheet
215 Statement of Shareholder Equity
220 Comprehensive Income
225 Income Statement
230 Statement of Cash Flows
235 Notes to Financial Statements
250 Accounting Changes and Error Corrections
255 Changing Prices
260 Earnings Per Share
270 Interim Reporting
272 Limited Liability Entities
274 Personal Financial Statements
275 Risks and Uncertainties
280 Segment Reporting
3
300: Assets
305 Cash and Cash Equivalents
310 Receivables
600 Revenue
605 Revenue Recognition
6
700 Expenses
705 Cost of Sales and Services
710 Compensation - General
Compensation - Nonretirement Poste
712
Benefits
715 Compensation - Retirement Benefits
718 Compensation - Stock Compensation
720 Other Expenses
730 Research and Development
740 Income Taxes
7
800 Broad Transactions
805 Business Combinations
808 Collaborative Arrangements
810 Consolidation
815 Derivatives and Hedging
820 Fair Value Measurements
825 Financial Instruments
830 Foreign Currency Matters
835 Interest
840 Leases
842 Leases
845 Nonmonetary Transactions
850 Related Party Disclosures
852 Reorganizations
853 Service Concession Arrangements
855 Subsequent Events
860 Transfers and Servicing 8
900 Industry
905Agriculture
908 Airlines
910 Contractors - Construction
9
926Entertainment - Films
928Entertainment - Music
930Extractive Activities - Mining
932Extractive Activities - Oil and Gas
940Financial Services - Broker and Dealers
942Financial Services - Depository and Lending
944Financial Services - Insurance
946Financial Services - Investment Companies
948Financial Services - Mortgage Banking
950Financial Services - Title Plant
952Franchisors
10
954 Health Care Entities
958 Not-for-Profit Entities
960 Plan Accounting - Defined Benefit Pension
Plan Accounting - Defined Contribution
962
Pension
965 Plan Accounting - Health and Welfare Ben
970 Real Estate - General
972 Real Estate – Common Interest
974 Real Estate - Real Estate Investment Trust
976Real Estate - Retail Land
978 Real Estate - Time-Sharing Activities
980 Regulated Operations
985 Software
995 US Steamship Entities 11
ASC section list
5 Overview and Background
10 Objectives
20 Glossary
25 Recognition
30 Initial Measurement
35 Subsequent Measurement
40 Derecognition
12
45Other Presentation Matters
50 Disclosure
60Relationships
70Grandfathered Guidance
13
IAS 40
INVESTMENT PROPERTY
This material is the property of Department of Accounting and Finance, CoBE, AAU.
Permission must be obtained from the Department prior to reproduction 14
15
RELEVANT STANDARDS
16
DEFINITION OF INVESTMENT PROPERTY
17
Proper
Classification of property IFRS
1. Is the property being held (or being constructed) for use in the
production or supply of goods or services, for rental to others, or for IAS 16
administrative purposes?
Is the building owned by the entity (or held under a finance lease) and
leased out under one or more operating leases?
Is the building vacant but held to be leased out under one or more
2. operating leases? IAS 40
A building constructed but the company has not decided the purpose for
IAS 40
which the asset is held.
Property held for more than one purpose
5. Is a portion of the property being held for investment purposes and another
portion being held for use in the production or supply of goods or services or
for administrative purposes?
• Can the portions be sold separately (or leased separately under a Apply IAS
finance lease)? 16/ 40 to
relevant
portion
Situation Classification
21
Cases - Classification of property
Situation Classification
Entity A owns a 10 floor office block. 6 floors-
It uses 4 floors as its headquarters offices. Investment property
The remaining 6 floors are leased out to tenants. 4 floors-
Under the laws in A's country, A is able to sell or PP&E
lease out under finance lease each one of the
floors separately
Entity B owns a 10-storey office block and leases out Investment property
each floor to tenants under operating leases. Entity B
also provides cleaning services for the lessees of the
building
23
Initial Recognition & Measurement IP
Recognition
Investment property should be recognized as an asset when two
Initial measurement
An investment property should be measured initially at its cost,
including transaction costs.
Leased investment property is measured according to IFRS 16
Leases
24
Measurement at initial recognition
OWNED
'cost' of
purchase transaction the
price costs investment
property
26
Subsequent Measurement
It should not change from one model to the other unless the change
will result in a more appropriate presentation.
28
Subsequent Measurement
Fair value model (FVM):
- No depreciation is recorded
29
Subsequent Measurement
The cost model
30
Case – Measurement after Recognition
Fair values:
31
Case – Measurement after Recognition
FVM example:
Investment property 10
Gain in value 8
Gain in value 7
32
IAS 40 - Transfers
33
Transfers: When
Investment
property
(IAS 40)
Owner- Inventories
occupied (IAS 2)
(IAS 16)
Case- Transfers
Entity A purchased a 500-acre plot of land on 1 January
2013 and it plans to meet with the Board on 30 June 2013
to decide what to do with the land
on 30 June 2013, Entity A decides to construct a shopping
mall whereby it will rent out the various plots of land under
operating leases to retailers
Entity A determines that it will take another 12 months to
obtain the construction permits, so it will begin construction
on 1 July 2014. In the meantime, it decides to farm the
premium ground to harvest corn.
35
Case- Transfers
36
Transfers
Situation
Case
A Corporation owns a building which it has been using as a
head office. In order to reduce costs, on 30 June 20X9 it
moved its head office functions to one of its production
centers and is now letting out its head office. Company policy
is to use the fair value model for investment property. The
building had an original cost on 1 January 20X0 of ETB 250,000
and was being depreciated over 50 years. At 30 June 20X9 its
fair value was judged to be ETB350,000.
Required
How will this appear in the financial statements at 31 December
20X9?
The building will be depreciated up to 30 June 20X9.
38
Case- Transfers
Original cost----------------------------------------------------250,000
Depreciation 1.1.X0 – 1.1.X9 (250/50 × 9) --------------(45,000)
Depreciation to 30.6.X9 (250/50 × 6/12) ----------------(2,500)
Carrying amount at 30.6.X9--------------------------------202,500
Revaluation surplus------------------------------------------147,500
Fair value at 30.6.X9-----------------------------------------350,000
The difference between the carrying amount and fair value is taken
to a revaluation surplus in accordance with IAS 16. However the
building will be subjected to a fair value exercise at each year end
and these gains or losses will go to profit or loss. If at the end of the
following year the fair value of the building is found to be
Br380,000, Br 30,000 will be credited to profit or loss.
39
IAS 40 - Derecognition
40
IAS 40 - Derecognition
41
IAS 40 - Disclosures
General disclosures:
42
Summary
43
Many Thanks!
Questions
&
Comments
44