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If property is being valued at fair value under IAS40, does deprecation apply in the normal way? Thanks
“does deprecation apply in the normal way?”
Paragraph 35 in IAS 40 states:
“Gains or losses arising from changes in the fair value of investment property must be included in net profit or loss for the period in which it arises”
If gains and losses are reported in the statement of profit or loss in the year in which that gain or loss arises, what’s the point of accounting for depreciation “in the normal way”
Depreciation will reduce the carrying value which will, in turn, increase the gain (or reduce the loss)
So there’s no point in charging depreciation where Investment Property is treated under IAS 40 following the fair value model
OK?
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