Chapter 4: Investment Properties

4.1 RECOGNITION
investment property can be recognised as an asset if:
o it is probable that future economic benefits associated with the investment property
will flow to the entity
o purchase price to the investment property can be measured reliably
there are three types of investment property
o owner-occupied property
building that is owner-occupied can be classified as investment property only
if the owner-occupied portion is significant
o ancillary services provided
if ancillary services provided is insignificant then the entity may treat the
property as investment property
o intra-group rental
property rented to members of the group can be classified as investment
property in the individual financial statements
maintenance costs measured daily are not recognised, such as house maintenance
subsequent costs for replacement of parts of the property are recognised if the expenditure
meets the recognition criteria
4.2 MEASUREMENT
all investment properties are measured at cost
this includes transaction cost
cost of purchased investment property consists of the purchase price and any direct
attributable expenditure such as legal fees
4.2.1 Fair Value Model
fair value of investment property should reflect the actual market state and circumstances as
of the balance sheet date, not as any future date
it is required to apply fair value model up until the disposal of the asset or until there is a
change in use
recognition of a gain or loss arising from a change in fair value of investment should be in the
income statement as of its arose period
fair value is not recoverable amount
4.2.2 Cost Model
should measure all of its investment properties at cost less any accumulated depreciation and
any accumulated impairment losses
4.3 TRANSFERS
transfer from or to investment property are allowed only when there is a change in use and
evidenced by:
o transfer from investment property to owner-occupied property on commencement of
owner-occupation
o transfer from investment property to inventories on commencement of development
with view to sale
o transfer from owner-occupied property to investment property at the end of the
owner-occupation
o transfer from inventories to investment property at the commencement of an
operating lease
o transfer from property in the course of construction or development to investment
property at the end of construction or development

4.4 DISPOSAL
an investment property should be removed from balance sheet on disposal or when the
investment property is withdrawn from use permanently and no future economic benefits are
expected from its disposal
from the difference between net disposal proceeds and carrying amount of the asset we can
determine the gain or loss arising from the disposal or retirement and this should be
recognised as income or expense in the income statement
4.5 DISCLOSURES
comparative information is required for all disclosures
for both fair value and cost model, an entity should disclose the following information
o if it applies to the fair value model, in any circumstances, property interests held
under operating leases are classified and accounted for as an investment property
o when it is difficult to classify, the criteria used to differentiate investment property
from owner-occupied property and from property held for sale in the ordinary
course of business rental income from investment property
o the methods and assumptions applied in determining the fair value of investment
property including a statement of determination of fair value was supported by
market evidence or heavily because of the nature of the property and lack of
comparable market dates
o fair value of investment property extents based on a valuation by an independent
valuer who holds a recognised and relevant professional qualification and has
experiences in the location and category of the investment property being valued
o if there is no valuation, the fact should be disclosed
o the amounts recognised in profit or loss for:
rental income from investment property
direct operating expenses (including maintenance and repairs) incurred from
investment property that generate rental income during the period
direct operating expenses (including maintenance and repairs) incurred from
investment property that do not generate rental income during the period
o the amount of restrictions on the reliability of investment property or the remittance
of income and proceeds of disposal
o contractual obligations to construct, purchase or develop investment property or for
repairs, maintenance or enhancement