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Dear nnithal123,
Under IAS 40 IP, At initial investment property always recorded at cost. Whether or not we take depreciation into operating charges it depends on which model we are taking in, either the cost model or the fair value model. Yes we take in depreciation if we opt for the cost model, however, we need to disclosed the fair value of the property for every reporting date. However, if we take in fair value model, we disregard depreciation.;
To answer your question whether or not we take in any charges. Yes, like IAS 16 PPE, we need to assess the nature of the expenditure whether it is capital expenditure or revenue expenditure
I hope it helps.
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Dear Antsam31, your understanding is correct for this IFRS 9. Under this IFRS 19, you can apply FVTOCI for both equity instrument and debt instrument.
Under debt instrument (ie bonds) , FVTOCI be applied when it applies to business model test and cash flow characteristics test. Please be careful the business model test between FVTOCI and amortised cost is slightly different and you must read carefully to spot the keyword to distinguish which method it fits in during the exam . It is to the extent that the under FVTOCI, the business model test must have 2 identity which it has both collecting contractual cash flows and SELLING FINANCE ASSETS. and amortized costs method has no intention to sell it to any other third party.
In conjunction with your understanding, for debt instruments the FVTOCI classification is mandatory for certain assets unless the fair value option is elected. Whilst for equity investments, the FVTOCI classification is an election.
Eequity instrument under financial assets can be valued under fair value through other comprehensive income (FVTOCI) too.
However, the requirements for reclassifying gains or losses recognised in other comprehensive income are different for debt instruments and equity investments. When derecognition, for FVTOCI under debt instrument is recycled through profit and loss while FVTOCI under equity instrument is recorded under OCE.
Hope it helps.
Please contact me Whatsapp +60165270093 if you will willing to share you ideas for further clarity.
Hi Ginetta. I actually on your side of prediction cashflow will be coming out.
As it appears every 4 sittings. However i guess it coming in the part of cash in financing activities with conjunction with either acquisition or disposal of subsidiary.
Let me know if you want to discuss this topic together at Whatsapp. +60165270093.
Good Luck Ginetta.
Hi Mahboba. Under IFRS 16, If we have leased out the property under finance lease, we have transferred the risks and rewards to the lessee. This means the lessee has the ‘right of use of the assets’.
Thus, we actually derecognise our asset which initially sits at either IP or PPE.
Hope this helps.
