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I was wondering if you have a warehouse and it is being revalued annually would this mean the fair value would be its potential value as an investment property?
Thank you.If as an investment property it was to be put to the same use (i.e. warehousing goods) I don’t see why not.
But you should be aware that IAS 16 revaluation model is not the same as IAS 40 fair value model.
Thanks again for your help.
In general do companies have to get permission to convert a warehouse to a residential building?In the UK, for example, it is necessary to make a planning application for change of use of premises – e.g. residential to commercial (offices/shops) of vice versa – or even for change of industrial use (e.g. from a warehouse to a factory) and also for development of a site (because of the need for access vehicles, etc, etc). How strict the planning regulations are and how long it takes to get “planning permission” would obviously depend on the country/jurisdiction.
So if you had a plan to convert a warehouse to a residential building (and you have a revaluation policy on all buildings) but you haven’t got permission for this conversion yet at the year end, then the maximum value the building can have at that year end is based on its value as a warehouse (ie significantly lower than the value it will have as soon as you do receive permission for the conversion). Yes?
Thanks again.At the end of the day “value” is what someone is prepared to pay!!! Theoretically, if there are 3 “identical” properties:
A. has no scope for extension
B. has scope for extension STPP (subject to planning permission)
C. has planning permission for extension.
C is worth more than B which is worth more than A.
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