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Investment Property -Dec’21 question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Investment Property -Dec’21 question

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 1, 2022 at 7:52 am #657025
    krishita.17
    • Topics: 2
    • Replies: 1
    • ☆

    Mims Co acquired an investment property for $20m cash on 1 January 20X5 and decided to use the fair value model to account for investment properties. As the property is expected to have a 20 year useful life, depreciation was recorded on this basis.

    As per IAS 40, we dont depreciate the property under fair value model, but this questions requires us to do so as per the model answers?
    Is it allowed to depreciare investment property under fair value model if required by the question?

    June 4, 2022 at 9:21 am #657326
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6158
    • ☆☆☆☆☆

    Hi,

    The company has the option to choose how to value the IP. If they have chosen the FV method then you are correct that depreciation is not chosen. Therefore, if they have depreciated the IP then this is incorrect and therefore the depreciation will need to be reversed out.

    Thanks

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