Comparison between U.S. GAAP and International ... - Grant Thornton

Comparison between U.S. GAAP and International Financial Reporting Standards 44
IFRS
Some properties comprise a portion that is held to earn
rentals or for capital appreciation and another portion that
is held for use in the production or supply of goods or
services or for administrative purposes. If these portions
could be sold separately (or leased out separately under a
finance lease), an entity accounts for the portions
separately. If the portions could not be sold separately, the
property is investment property only if an insignificant
portion is held for use in the production or supply of goods
or services or for administrative purposes (IAS 40.10).
IAS 40.11-.14 contains guidance where other services
provided to property – particularly relevant for situations
like a hotel-owning company that subcontracts hotel
management elsewhere.
In some cases, an entity owns property that is leased to,
and occupied by, its parent or another subsidiary. The
property does not qualify as investment property in the
consolidated financial statements, because the property is
owner-occupied from the perspective of the group.
However, from the perspective of the entity that owns it,
the property is investment property if it meets the definition
in IAS 40.5. Therefore, the lessor treats the property as
investment property in its individual financial statements
(IAS 40.15).
U.S. GAAP
No equivalent standard.
No equivalent standard.
Measurement at recognition
An investment property shall be measured initially at its
cost. Transaction costs shall be included in the initial
measurement (IAS 40.20).
The initial cost of a property interest held under a lease
and classified as an investment property shall be as
prescribed for a finance lease by IAS 17.20, i.e. the asset
shall be recognised at the lower of the fair value of the
property and the present value of the minimum lease
payments. An equivalent amount shall be recognised as a
liability in accordance with that same paragraph
(IAS 40.25).
IAS 40.27-.29 contain guidance where the asset is
acquired in exchange for a non-monetary asset(s), or a
combination of monetary and non-monetary assets
(similar to IAS 16).
No equivalent standard.
Exchanges of nonmonetary assets are covered by
ASC 845.
Measurement after recognition
Except for IAS 40.32A and .34, IAS 40 permits two
recognition approaches. An entity shall choose as its
accounting policy one of the following models and shall
apply that policy to all of its investment property
(IAS 40.30):
No equivalent standard. Investment property
measurement is similar to the IFRS cost model (but fair
value disclosure is not required).
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