Often times a business will identify and purchase property such as real estate for the purposes of investing and selling for a profit at a later date, earn rental income, hold for an undetermined future use, etc. What often isn’t classified as investment property would be items such as property being used to house administration functions of the business or production facilities being used.
Treatment of Investment Property differs from that of other real property, in that after it is measured at cost during purchase, it is to be written up or down based on market indicators of fair value. If this is not possible due to market conditions, the adjustment to fair value is not to be recorded and normal treatment under IAS 16 – Property, Plant & Equipment shall be utilized until disposal of the property.
IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.
Accounting made easy, for FREE!
Access the contact form and send us your feedback, questions, etc. We are always welcome to help someone out. You can also contact us if you wish to submit your writing, cartoons, jokes, etc. and we will consider posting them to share with the world! The Facebook and LinkedIn groups are also good areas to find people interested in accounting like yourself, don’t hesitate to join as everyone of all levels are welcome to become part of the community.