International Financial Reporting Standards_guide.pdf

Chapter 11 Investment Property (IAS 40) 125
■ There is a rebuttable presumption that an entity can reliably determine the fair value of
an investment property. However, in exceptional circumstances it may happen that it is
clear when the investment property is first acquired or classified as such that the entity
will not be able to determine its fair value on a continuing basis. In such circumstances
the property is measured using the benchmark treatment in IAS 16 until its disposal
date. The entity measures all of its other investment property for which fair value is
determinable at fair value.
11.4.6 Transfers to or from investment property should be made when there is a change
in use. Special provisions apply for determining the carrying value at the date of such
transfers.
11.4.7 An investment property should be derecognized on disposal or when the investment
property is permanently withdrawn from use and no future economic benefits are expected
from its disposal. Gains or losses arising from the retirement or disposal of an investment
property shall be recognized in profit or loss, unless another standard provides for different
treatment. For example, IAS 17 has specific rules for the recognition of gains or losses arising
from sale and leaseback transactions.
11.5 PRESENTATION AND DISCLOSURE
11.5.1 Accounting policies should specify the following:
■ whether the entity applies the fair value or cost model to investment properties;
■ if the fair value model is applied then under what circumstances property interests
under operating leases are classified as investment property; and
■ the criteria used to distinguish investment property from owner-occupied property.
11.5.2 The following disclosures relating to significant estimates and assumptions should
be provided:
■ methods and significant assumptions applied in determining fair value;
■ the extent to which the fair value has been determined by an external, independent
valuer;
■ measurement bases, depreciation methods, and rates for investment property valued
according to the cost model;
■ the existence and amounts of restrictions on the investment property; and
■ material contractual obligations to purchase, construct, or develop investment property
or for repairs or enhancement to the property.
11.5.3 The Statement of Comprehensive Income and notes should include the following:
■ rental income from investment property;
■ direct operating expenses arising from an investment property that generated rental
income; and
■ direct operating expenses from an investment property that did not generate rental
income.
11.5.4 The Statement of Financial Position and notes should include the following:
■ When an entity applies the fair value model:
– A detailed reconciliation of movements in the carrying amount during the period
should be provided.