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Inclusion within IAS 40 includes:
1. Building leased out under an operating lease
2. Vacant building held to be leased out under an operating lease.
Who are we talking about here? Who will show it the building as an investment property, the lessor or the lessee? “leased out” means giving it out for lease right? So this applies to the lessor perhaps?
Also, I don’t understand this other requirement in IAS 40. “Where the services provided are more significant (such as in the case of an owner managed hotel), the property should be classified as owner – occupied property, plant and equipment. ” What is an owner managed hotel, and what is the explanation to this rule? How does it apply to the owner managed hotel?
“Who are we talking about here?”
Talking about the lessor
“Who will show it the building as an investment property, the lessor or the lessee?”
The lessor
““leased out” means giving it out for lease right? So this applies to the lessor perhaps?”
Agreed
“What is an owner managed hotel, (that’s a hotel owned and run by the same person. So it’s not a HIlton or a Holiday Inn. It’s a “private / non-chain hotel)
“and what is the explanation to this rule? How does it apply to the owner managed hotel?”
An hotel is more than just an investment property. It’s a source of income from dinners, overnight stays, bars, functions and so on. So, although it may appear to be an investment property, the services element are a major part of the hotel’s ability to generate income. So it’s not an investment property
OK?
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