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Hello,
Sir I want elaboration on the following points:1) why fair value changes are reported in p&l when revaluation changes are reported in OCl. Property is not sold yet, then why changes are taken to p&l.
2) When a lessee uses the FV model to measure an investment property that is held as a right of use asset, it shall measure the right to use asset not the underlying property at fair value.
3) When lease payments are at market rates, the fair value of an investment property held by a lessee as a right of use asset, net of all expected lease payments, should be zero.
4) when FV of investment property can’t measured cost model should be used but residual value should be assumed to be zero, why?
Hope to get answer soon!
Hi,
1) This is because the property has been bought for investment purposes as opposed to say investing in stocks/shares. The treatment therefore matches up to the treatment for the change in fair value of shares.
2) Correct
3) It should be but there might be some small slight rounding differences
4) If there is no fair value then how can we work out a residual value
Most of you points above though are going beyond what is required for FR, so please don’t worry too much about it.
Thanks
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