PAS 40: INVESTMENT PROPERTY - Transfer only when the property first meets,

or ceases to meet, the definition of investment

Definition and initial recognition of investment property.
property - An entity shall transfer a property to, or from,
Investment property: is property (land or a building, investment property when, and only when,
or part of a building, or both) held by the owner to there is a change in use
earn rentals or for capital appreciation or both, rather IP@FV to Owner Occupied or Inventory
than for:
For a transfer from investment property carried at fair
a. use in the production or supply of goods or
value to owner‑occupied property or inventories, the
services or for administrative purposes, or
property’s deemed cost for subsequent shall be its fair
b. sale in the ordinary course of business
value at the date of change in use.
Capital Appreciation: increasing the value
Owner Occupied to IP@FV
Portional Classification: Some properties comprise a
If an owner‑occupied property becomes an
portion that is held to earn rentals or for capital
investment property that will be carried at fair value,
appreciation and another portion that is held for use
an entity shall carry the property at fair value on the
in the production or supply of goods or services or for
date of change in use. The entity shall treat any
administrative purposes.
difference at that date between the carrying amount
- Account them separately of the property and its fair value in the same way as a
revaluation.
Ancillary services: An entity provides ancillary
services to the occupants of a property it holds. An Inventories to IP@FV
entity treats such a property as investment property if
For a transfer from inventories to investment property
the services are insignificant to the arrangement as a
that will be carried at fair value, any difference
whole.
between the fair value of the property at that date and
Measurement at initial recognition its previous carrying amount shall be recognized in
profit or loss.
- Cost at initial recognition
- If payment is deferred beyond normal credit Disposal
terms, the cost is the present value of all future
- An investment property shall be derecognized
payments.
on disposal or when the investment property
Measurement after recognition is permanently withdrawn from use and no
future economic benefits are expected from
- An entity shall choose as its accounting policy its disposal.
either the cost model in paragraph 206 or the - Gains or losses arising from the retirement or
fair value model in paragraph 207 and shall disposal of investment shall be recognized in
apply that policy to all of its investment profit or loss in the period of the retirement or
property. disposal.
Subsequent Measurement Disclosures
Cost model: shall measure all of its investment Entities applying the cost model shall disclose the
properties in accordance with Section 12 - Property, following for each class of investment property:
Plant and Equipment requirements for that model.
a. the depreciation methods used.
Fair Value model: shall measure all of its investment b. the useful lives or the depreciation rates used.
properties at fair value at each reporting date with c. the gross carrying amount and the
changes in fair value recognized in profit or loss. accumulated depreciation (aggregated with
- If a reliable measure of fair value is no longer accumulated impairment losses) at the
available, the entity shall thereafter account beginning and end of the reporting period.
for that item under the cost model in d. a reconciliation of the carrying amount at the
accordance with paragraph 206. beginning and end of the reporting period
showing separately:
Transfers
 i. additions.
ii. disposals.
iii. acquisitions through business
combinations.
iv. impairment losses recognized or
reversed in profit or loss
v. depreciation.
vi. other changes.
This reconciliation need not be presented for prior
periods.
Entities applying the fair value model shall disclose
the following:
a. whether an independent valuer was involved;
b. the methods and significant assumptions
applied in determining the fair value of
investment property;
c. a reconciliation between the carrying
amounts of investment property at the
beginning and end of the period, showing
separately:
i. additions, disclosing separately those
additions resulting from acquisitions
through business combinations.
ii. net gains or losses from fair value
adjustments.
iii. transfers to cost model when a
reliable measure of fair value is no
longer available without undue cost or
effort (see paragraph 208)
iv. transfers to and from inventories and
owner-occupied property.
v. other changes.
This reconciliation need not be presented for prior
periods.