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Hi,
I have a question relating to the difference between revaluation model and fair value model. I wonder that why under fair value model with IAS 40, we can record gain/loss from revaluation directly to SOPL. I have understood why under fair value model, no depreciation is charged however I still dont understand the accounting treatment with the revaluation under fair value model.
Thanks.Hi,
The reason behind this is because the property is being held for investment purposes, hence our intention is to realise any gains on the property through its sale. Out other option of investing the funds would be to buy shares in a company, say, and the gains/losses on shares are taken through profit or loss, so by taking the gains/losses on IP through profit or loss too then we are matching up the accounting treatment for the different but similar investment strategies.
Thanks
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