IAS 40 Investment Property
Initial measurement is at cost, including transaction costs. Subsequent accounting uses the fair-value model or cost model under the applicable rules. Fair-value changes under the fair-value model are recognised in profit or loss; the cost model follows the applicable cost requirements and fair-value disclosure rules. Transfers to or from investment property require evidence of a change in use.
Worked example
An office property held for rental has an initial carrying amount of $500,000. Under the fair-value model, if its year-end fair value is $530,000, the entity recognises a $30,000 gain in profit or loss.
Common mistake
Assuming fair value is always mandatory or moving owner-occupied property to investment property solely because management changes its intention without evidence of a change in use.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |