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IAS 40 relates to property (land or buildings) held to earn RENTALS or for capital appreciation.
On the other hand IAS 16 says that they are also held for use in production, administrative purpose along with RENTAL to others.So, the word RENTAL is in both of the definitions. So which RENTAL can u classify as IAS 40? Is it only LAND & BUILDINGS rentals can be classified as IAS 40 and Equipments other than LAND & BUILDINGS will be classified as IAS 16? Is this the only difference here for RENTAL?
Pretty much yes – you have to remember that IAS 16 was the standard for investment properties until IAS 40 was issued. So IAS 40 is taking accounting for investment property out of IAS 16 (I don’t have it to hand, but if I had, the scope para of IAS 16 probably says that it does not apply to properties that fall within the scope of IAS 40).
Another point to note though is that the renting out of a property does not make it an investment property – consider, for example, if it was rented to a subsidiary company that would amount to “owner-occupation” from a group perspective.
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