Poland

Accounting aspects of
investing in the Real Estate
market
Fair value model
If the fair value model is selected, the
changes in the fair value of investment
property are recognized in the income
statement as other operating costs or other
operating income (before the amendments
to the Act which came into force on 1
January 2009 changes in the investment
property fair value were recognized
through equity).
Cost model
If the cost model is applied, investment
property is recognized and subsequently
measured at acquisition or construction
cost, less accumulated depreciation and
accumulated impairment write-offs. Land
is valued at its acquisition cost reduced
by impairment write-offs. Investment
properties, except for land, are depreciated
on a straight-line or other systematic basis
over the investments’ estimated useful
lives.
Borrowing costs which relate to the
construction, adaptation, assembly or
improvement of an investment property
are capitalized as part of the cost of the
asset, where those borrowings have
been drawdown for that specific purpose
through to the date of the completion of the
construction or improvement.
Financial instruments
Financial instruments are initially
recognized at their acquisition cost (price),
being the fair value of the consideration
given. The costs of the transaction are
included in their initial value.
After initial recognition, financial assets
(including derivatives and embedded
derivatives) are classified into one of the
following four categories and reported as
follows:
• held to maturity – measured at
amortized cost, calculated using the
effective interest rate;
• loans and receivables – measured at
amortized cost, calculated using the
effective interest rate, short term
receivables for which no interest rate
has been set are measured at the
amount due;
• held for trading – measured at fair value
with unrealized gains/losses recorded in
the profit and loss account;
• available for sale – measured at fair
value, with an unrealized gains/losses
recognized in the profit and loss account
or in the revaluation reserve component
of equity until the investment is sold or
impaired at which time the cumulative
gain/loss is included in the profit and loss
account – the policy choice should be
made by the management of the entity.
Loans and borrowings are initially
recognized at cost, being the value of the
funds received and including transaction
costs associated with the borrowing/loan.
After initial recognition, all interest-bearing
loans and borrowings, other than liabilities
held for trading, are measured at amortized
cost, using the effective interest rate
method.
Financial liabilities, except for hedged
items, are valued at amortized cost not
later than at the end of the reporting
period. Liabilities which are held for trading
are subsequently measured at fair value.
Any gain/loss from re-measurement to fair
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