Chapter 5: Non-current assets

Investment property and change of use. Addlington owns a property that it is using as its head office. At 1 January 2015, its carrying value was $20 million and its remaining useful life was 20 years. On 1 July 2015 the business was reorganised and cheaper premises were found for use as a head office. It was therefore decided to lease the property to third parties. The property was valued by a qualified professional, who assessed the property's value as $21 million on 1 July and $21.6 million on 31 December 2015. Addlington's year end is 31 December and it uses the fair value model for investment property.

Investment property. Deller owns a property which it does not occupy and is rented to third parties under an operating lease. The property was acquired on 30 June 20X3 for $5m and had an estimated useful life of 40 years. Deller uses the fair value model to measure investment property and the fair value of the property was estimated at $5.4m at 31 December 20X3. If the property was sold then expected selling costs would be $0.1m.

Work in $000 (for example, $5m is 5,000).