Meet Definition of. Be investment property. & Follow FV Model. Earn Rentals

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Monica Brooks
6 years ago
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1 Meet Definition of Requirements It s Property Held to Use in Production Process Or Admin Purpose Earn Capital Appreciation Earn Rentals & Follow Model Instead of And Available on Property By Property Basis & if interest in Lease is to Be investment property No requirement Separate Land & Buildings Sale in ordinary course Of Business Otherwise meet Definition Only If Model Property by property basis Once model Select Same Class Assets / Similar Assets Applied for All Page1

2 Owner Occupied Property Independent Difference Cash Flows Cash Flows Held Currently for Attributable Generated Property Land Undetermined Value Property & other Assets Land Held for Vacant Building Owned Used Long term & leased Production Process Building Capital Appreciation Held To be leased Operating Lease Page2

3 Attributable & other Cost Initially VAT Recovered From SARS Probable Future Recognition Measurement Deferred Cost of Payment Self Constructed Results PV 14% 10 % Economic Un-Registered Cost Exclude Start up Cost Vendor Incurred Registered Abnormal Waist Losses Benefits Measurement Cost Reliable Apply IAS 16 Until Construction Development Completed Not Prior Planned Attributable Level Bringing Occupancy To Operating Lease Achieved State Acquisition Subsequent Costs Major Service Additions Replacement Page3

4 Exchanged / Swap Accounting Policy Except No Commercial Cannot Measurement After Recognition Choose Model Then Apply Same Class Cost Reliably Must Assets Substance Measured Determined For Both Models Both Given Up Acquired Cost Then CA Measurement & Disclosure Given UP Even If Cost Model used Without Deducting Transaction Costs Page4

5 Gain s / Losses Model Lessee Interest Used Reflects Until Time Specific Held Apply to Mkt Cash outs Operating Lease Rental Disposal Expected Conditions Apply Unless Even When Reasonable Year End Model Acquisition Supportable Comparable Current undeterminable Assumptions Markets Rebuttable Reliably Representing No longer Leases Value in Use Exist Cost Model Continual Basis Then Use Presumption That Knowledgeable Parties Willing Entity About Rental Reflects Estimates Can Determine Effects of Factors Specific to Entity Income Considering MKT Conditions Page5

6 Carry Amount Does not Change Transfers Page Change in Use Cost Model Development Construction To From Measure End Of Change in Use All investment property Cost Less Owner Occupation Sale Development With a View to Commencement Accumulated Difference Depreciation Owner Occupation Impairment (Inventories) Except when CA Measured Held for Sale Revaluation Increase Operating Lease To other Party Reverse Remainder Subsequent Decrease Date of Change Prior Impairment Reduce Intention Revaluation Surplus Increase Then Limited to Historic Cost Revaluation Surplus Page6

7 De-recognition Disposal Compensation from 3 rd parties Derecognised Achieved Gains or Losses Disposal Sale Difference Finance Permanently Lease CA/ Withdrawn from Use Proceeds Date of Disposal & No Future Economic Benefits Are expected From Disposal Deferred Tax Implications PG 81 IAS 18 Revenue Recognition Criteria Met Consideration Received Deferred Payment PV Difference Nominal Amount Cash Interest Page7

8 Examples of Investment property? Is Owner occupied property regarded as investment property? Leased property? is it investment property When do we recognize investment property? How do we measure investment property? Initially or subsequent? Is it given or must you have a policy to measure? Exchange swap at what value are they recognized? How is an arms length transaction determined? Why is there a rebuttable presumption to that one can reliably measure fv of investment property? Change in use? transfers? Cost Model and model Page8

9 Recognition Asset Para 16 Scope of this statement Land held for capital appreciation? Land held for undetermined use? (disposed of in a short term) Operating lease? Currently being constructed, for investment property basis. Owner Occupied Properties? Can we classify as or when Can we classify as investment property Owner Occupied can be sold separately Where we can t it must be insignificant Where subsidiary company occupies parent s investment property o Parent s financials Investments Property o Consolidated PPE Measurement Initial Subsequent - Probable that future economic benefits - Costs can be measured reliably Can we interchange the use of the Model and cost model? Para 31 IAS 40 how do we determine it? is a suitably qualified valuator required or preferred? Para 32 Page9

IAS 40. Definition. Examples. Investment property. Investment Property. Examples of investment property

IAS 40. Definition. Examples. Investment property. Investment Property. Examples of investment property IAS 40 Investment property Definition Investment Property Investment property is property held by the owner to earn rentals or for capital appreciation or both. 2 Examples Examples of investment property