This relates to any properties owned outright or under a finance lease (then leased out) with the aim of generating capital growth or earn rental income (or both). This therefore excludes properties used in the day to day operations of the business or any owner occupied properties
Recognition and Measurement
Investment property is recognised as an asset when
It is probable that future economic benefits will flow that can be attributed to the investment property and...
When the cost of the investment property can be measured reliably
This is the purchase price and any costs directly attributable to the acquisition of the investment.
If purchased under a finance lease, the initial cost recognised must be under IAS 17 Leases
Expenditure post purchase
Day to day expenditure is expensed in the P&L
Cost of any replacement parts is capitalised and the remaining cost of the part replaced is de-recognised.
Measurement after recognition
An Entity has a choice between two methods of valuing investment properties
Fair Value Model
Fair value is the price that would be received when selling the asset in an orderly transaction between market participants.
If a company chooses this method, it must value all it's investment properties this way
A gain or loss in the fair value of an investment property is included in the P&L of the period in which it arises
Is there is clear evidence that fair value cannot be measured reliably, an entity can use the cost method however all other investments should still be valued at fair value
After initial recognition, a company that chooses the cost model must value all other investment property under the cost model in IAS 16 Property Plant and Equipment e.i at cost less accumulated depreciation.
Transfers to and from investment properties can only occur when and if
-Owner occupation commences or
-End of owner occupation
-Development of asset with a view to sale
-commencement of an operational lease to another entity of an item transferred from inventories to investment property
withdrawal from use with no future benefits
-the extent to which fair value is based on an independent valuation
-those that help generate rental income
-those that did not generate rental income
Fair Value Model
Reconciliation from opening carrying value to closing included movements