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Hi,
assume that there is a building purchased on 1/1/2010 for 100,000 (useful life 50 years, nill residual value), which is held under revaluation model and used for admin purposes.
On 1/7/2010, management decides to classify A as an investment property (stadard requirements are met).
FV at that date, is 110,000.
Q1: In this case, since NBV is 99,000 (100,000-100,000/50/2) at classification, 11,000 will be transferred to OCI or to P&L?Q2: if the year end is 31/12/2010 and the value of the property declined to 85,000, how and where will be the reduction reflected?
Q3: if a company purchases an vehicle for its own distribution purposes and then decides to rent it out, is not it an investment property? (definition includes only Building and Land; but the vehicle earns rentals just like an investment property/building).
Thanks a lot.
GigaHi Giga,
Prior to the change to IP we need to revalue under IAS 16 and then transfer, so:
1) This would go through OCI as it is when we are revaluing prior to it being transferred to IP. Gains on revaluation under IAS 16 go through OCI.
2) Subsequent changes in value would go through profit or loss as per IAS 40, so this wold hit profit or loss.
3) A motor vehicle is definitely not property. If we decided to lease it out then it would fall under IFRS 16 and we would be the lessor.
Thanks
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