Dear Mike, would you be so kind to answer my question:
If a transfer a fixed asset ( fair valued) from IAS 16 to IAS 40; IAS 40 says that immediately before classification I should fair value again the asset and, if necessarily, recognize a revaluation reserve.
What if, later, the investment property’ value decreases? Shall I use the revaluation reserve or shall I recognize directly a loss? My problem is that I have a gain recognized in the equity for that asset and I should recognize a loss in P&L.
Same question for a transfer from IAS 16 to IFRS 5.
Kind regards,
Ask the Tutor ACCA SBR
Transfer from IAS 16 to IFRS 5 and IAS 40
Mirelutza, I confirmed my own thoughts on this by checking on IASPLUS website and I quote:
"Fair value model
Investment property is remeasured at fair value, which is the amount for which the property could be exchanged between knowledgeable, willing parties in an arm's length transaction. [IAS 40.5] 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. [IAS 40.35]"
Here's the link so you can confirm it for yourself!
https://www.iasplus.com/en/standards/ias/ias40
Dear Mike,
Thank you for your response.
My problem is that it seems peculiar to recognize a loss in P&L as long as there is a gain in the Comprehensive Income.
Kind regards for your time devoted to my answer.
You're correct .... and that's why I confirmed it by looking at the IASPLUS website. In fact, until about 6 weeks ago, on this very site, I had the same idea as you. A student kindly pointed out the error of my ways and rather pulled the rug out from under my feet. I had to read and then re-read the relevant extract from IASPLUS (and I'm still perplexed!)
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