Please forward this error screen to 81. Many accountants falsely believe that there’s only one standard that deals with long-term gain on disposal of investment assets: IAS 16 Property, Plant and Equipment.
While it’s true that you need to apply IAS 16 for most of your long-term tangible assets, it’s not the one ruling all. I tried to falsify this myth some time ago here. Except for IAS 16, we have a few other standards arranging the long term assets. IAS 40 Investment Property is one of them. The video is waiting for you in the end.
Before we dive in IAS 40, my good friend Professor Robin Joyce wrote a wonderful piece that teaches you accounting for IAS 40 in 40 seconds. It’s a full IFRS learning package with more than 40 hours of private video tutorials, more than 140 IFRS case studies solved in Excel, more than 180 pages of handouts and many bonuses included. If you take action today and subscribe to the IFRS Kit, you’ll get it at discount! Click here to check it out! Accounting for IAS 40 in 40 seconds Ready? Any remaining seconds should be spent on learning the classifications and rules of IAS 40 Investment Property.
Now, let’s take Robin’s advice and spend the remaining seconds for learning the rest. Objective of IAS 40 IAS 40 Investment Property prescribes the accounting treatment and disclosure with respect to investment property. Here, the strong impact in on purpose. For sale in ordinary course of business.
IAS 2 Inventories fits when you use them for the sale in ordinary course of business. Examples of investment property What specifically can be classified as investment property? However, if you buy a land and you intend to build some production hall for your own purposes sometime in the future, then this land is NOT an investment property. A building owned by the entity and leased out under one or more operating leases. This includes a building that is still vacant, but you plan to lease it out. Any property that you actually construct or develop for future use as investment property.