Q1 ias 40 says that a non current asset is classi ed as investment property when its future

economic bene ts will in ow to the entity in the form of other operations like capital appreciation
rather than through the normal day to day operations so the land held for capital appreciation
purposes should be classi ed under ias 40 investment property and carried at its fair value with
subsequent changes to its fair value recognised in statement of pro t or loss as income or gain.

Other land which purpose is not yet de ned is atleast a ected by changes to its fair value so it
should also be classi ed under ias 40 investment property and carried at its fair value.

The housing inventory should be classi ed under ias 2 inventories as its sale is under the normal
day to day operations of the housing department and should be valued at lower of cost or nrv

The inventory which is given to employees as housing should be classi ed under ias 16 as its
future economic bene ts will be realised in the ordinary operations of business rather than
through one arm sale so should be carried at cost/usefull life and any change in fair value being
realised in oci.

Q2 the green certi cates can’t be classi ed as an asset under ias 2 as although the entity controls
it as a result of past events and future economic bene t will in ow to the entity its cost can’t be
measured reliably.
So the green certi cates should be classi ed as revenue grant under ias 20 and should be
recorded as income as it is realised.
And although the cost of audit and producing green electricity can help point out its origin of
production the cost of audit is committed and the additional cost of producing green electricity
also can’t be reliably measured.

Q3 the school should be recorded under ias 16 initially at cost of 5m and depreciated over its
useful life of 25 years making its nbv at nov 30 20x6 of 3.8m as it is used for day to day
operations of business and its economic bene ts will be received by day to day use rather than
one arm sale.
The asset can’t be tested for impairment under ias 36 as its value in use and nrv can’t measured
reliably.
The change of asset at a cost of 2.1m dollar into a library can’t be added as a upgrade to its cost
as under ias 16 there is no change in useful life of asset and no change in future economic
bene ts as the library is also of similar size so it should be expensed out as it is incurred and the
asset should continue to depreciate over its remaining life.

Q4 the buildings should be initially recorded at cost under ias 16 at a cost of 10m
And deprecited at its useful life of 20 years leaving nbv at 30 nov 20x4 of 9.5

The buildings should be revalued downwards under ias 36 impairment of assets as the building
should be record at lower of cost and its recoverable amount which is 8m so an impairment loss
of 1.5m should be recognised in pol

Next year 20x5 the remaining value of 8m should be depreciated over 19 years giving an annual
depreciaition charge under ias 16 of 0.42 m giving nbv of 7.58 as it is carried under revaluation
model an change in fair value should be recognised under oci and asset should be carried next
year at its revalvued amount of 11m and revaluation surplus of 3.42.
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