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Investment property can be carried at cost or fair value method.
As understood from Kaplan textbook under fair value model as example:
cost at 1 mio. then revalued to 1.1. mio. the gain to be recognised as 01. mio in statement of profit and loss.What about cost model. the same example, but under cost model with depreciation charged. The gain is the difference between carrying amount and valuation? Is it correct? Should be recognised in profit and loss?
Thanks.
No! If you’ve adopted the cost model then the investment property is carried at cost less accumulated depreciation
If you had thought that you may want to revalue the property, then you should have opted fort he fair value model
As a disclosure necessary when following the cost model, an entity should disclose the fair value of investment property by way of note to the financial statements. If the fair value of an item of investment property cannot be measured reliably, additional disclosures are required, including, if possible, the range of estimates within which fair value is highly likely to lie
OK?
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