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Hello Chris!
Why under the fair value model, a gain or loss on revaluation(Investment Property) goes to P&L and not to OCI?
– Prudence concept says that any profit should only be accounted when they are realised and a gain on the property, I presume, is an unrealied gain. (I presume that when we will sell the IP, then we will realise the gain)Kindly clarify this.
Thanks in advance.
Hi,
It a slightly strange one but the key is due to the property being held for investment purposes. As we are looking to make gains on our investment, similar to that we would make if hold equity shares, then the gains/losses will go through profit or loss.
If we own shares in a company then the default treatment is to measure them at fair value through profit or loss, so we should therefore have the same treatment for property that is held for investment purposes.
Thanks
Thanks for the reply.
So are we saying that in a way, a gain is being ‘realised’ each year by the investment property?
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