Investment property fair-value model
An entity selects and applies its IAS 40 accounting policy subject to specific rules and exceptions. Under the fair-value model, do not depreciate the investment property; remeasure at each reporting date and recognise changes in profit or loss. The cost model is also permitted in appropriate circumstances and has separate measurement and disclosure requirements. A change of use, supported by evidence, determines transfers between categories.
Worked example
An investment property measured under the fair-value model rises from $500,000 to $540,000 during the year, with no other movements. The entity recognises a $40,000 fair-value gain in profit or loss.
Common mistake
Recognising the fair-value gain in a PPE revaluation surplus or assuming every entity must choose the fair-value model for investment property.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |