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CFAS PAS-40 InvProperty
CFAS PAS-40 InvProperty
INVESTMENT PROPERTY
CONCEPTUAL FRAMEWORK AND REPORTING STANDARD
PREPARED BY: Aquino, Tanya Pia L.
REVIEWED BY:
Disclaimer: This handout was developed from different definitive consolidated internal and
external sources and is intended to help students during this pandemic. Every effort has been
made to provide reliable information and guidance. No part of this handout can be distributed
and sold for profit without permission from the preparers but can be reproduced for academic
purposes only.
Acknowledgement is given to all the professors and JPIAns in the National University College of
Business and Accountancy and to God.
PAS 40
Investment Property
-Defined as property (land building as part of a building or both) held by an owner or by the lessee under
a finance lease to earn rentals for or capital appreciation or both.
*only land and building can qualify as investments property
*any movable property cannot qualify as investment property
Examples of investment property
a. Land held for long-term capital appreciation
b. Land held for currently undetermined use.
c. Building owned by reporting entity leased out under an operating lease
d. Building that is vacant but is held to be leased out under an operating lease.
e. Property that is being constructed or developed for future use as an investment property
From the word itself a portion may be for leasing to earn while another portion is for owner use.
*the property is an investment property if only an insignificant portion is held for manufacturing
or administrative purposes.
From the perspective of the individual entity that owns it, the property lease to another subsidiary
or its parent is considered an investment property.
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NATIONAL UNIVERSITY
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
*The price in the principal market used to measure fair value shall not be adjusted for
transaction cost.
*If an office is leased on a furnished basis, the fair value of the office generally includes the fair
value of the furnitures.
* the changes in fair value from year to year are recognized in profit or loss.
* no depreciation is recorded for investment property
b. Cost model – at cost less any accumulated depreciation and any accumulated impairment losses.
*PAS 40, paragraph 53 mandated that the entity shall measure such investment property using
the cost method until the disposal of the investment property
* fluctuations are not recognized.
a. On disposal
b. When Investment property is permanently withdrawn from use
c. When no future benefits are expected from the investment property.
Disposal of Investment Property
Gain or loss of investment property shall be determined as the difference between the net disposal
proceeds and the carrying amount of the asset.
Disclosures related to Investment Property
1. Whether the entity uses Fair value or cost model of measuring investment property
2. The amount of rental income for the period along with the related expense.
3. Restrictions on the investment property either through rental or sale proceeds
4. Contractual obligations to purchase or construct investment property.
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NATIONAL UNIVERSITY
JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS
SOURCES:
Author. (200x). Book Title
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