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TANGIBLE ASSETS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › TANGIBLE ASSETS

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 30, 2021 at 2:21 pm #626700
    shaunak22
    Participant
    • Topics: 220
    • Replies: 41
    • ☆☆☆

    Which of the following statements is correct regarding investment properties?
    (1) Transfers to or from investment property should only be made when there is a
    change in their use.
    (2) Transfers from an investment property to an IAS 16 property must be made at the
    fair value of the investment property at the date of the transfer.
    (3) An entity should treat any difference at the transfer date from a capitalised property
    (treated under IAS 16) to an investment property as an expense to the profit or loss.
    ?? )Statement 1 only
    ?? )Both statements 1 and 2
    ?? )Both statements 2 and 3
    ??) Both statements 1 and 3

    how is the answer 2 option i.e. 1&2

    i undertood why 1 is the answer but how is 2 the right answer since it was written in kaplan that transfer from investment property to PPE(IAS16) can be made at cost as well so howcome the 2nd option is right?

    THE TEXT GIVEN IN KAPLAN

    If an asset is transferred from investment property to property, plant and
    equipment and the fair value model for investment property is used:
    ? Revalue the property first per IAS 40 (taking the gain or loss to the
    statement of profit or loss) and then transfer to property, plant and
    equipment at fair value
    .
    If the cost model is used for investment properties:
    ? The asset is transferred into property, plant and equipment at the current
    carrying amount and continues to be depreciated.

    June 30, 2021 at 7:38 pm #626732
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    2) is correct as the asset is measured under IAS 40,so to fair value with gains/losses through profit or loss, prior to being transferred to PPE under IAS 16.

    3) is incorrect as when transferring from PPE under IAS 16 then we would revalue with gains going through OCI (reserves), they would not go through profit or loss.

    Thanks

    July 1, 2021 at 1:46 am #626753
    shaunak22
    Participant
    • Topics: 220
    • Replies: 41
    • ☆☆☆

    Cant the transfers from an investment property to an IAS 16 property must be made at the COST of the investment property at the date of the transfer? or is it necessary for it to be revalued to fair value?

    July 5, 2021 at 8:15 pm #627039
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    All IAS/IFRS revolve around measurement to fair value and it is no different here. Revalue to fair value and then transfer.

    Thanks

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