📖 Overview
IAS 40 prescribes accounting for investment property (property held to earn rentals or for capital appreciation, not for use in production or administration). Entities may choose either the fair value model or the cost model.
🎯 Scope
Applies to property held for rental income or capital appreciation, including land and buildings. Does not apply to owner-occupied property (IAS 16) or property held for sale (IFRS 5).
⚙️ Key Principles
1. Fair Value Model: All investment property measured at fair value; changes in fair value recognized in profit or loss. No depreciation.
2. Cost Model: Measured at cost less accumulated depreciation and impairment (same as IAS 16).
3. Choice of model applies to all investment property; change only if fair value becomes reliably measurable.
📏 Measurement
Fair value: price in an active market or using valuation techniques (discounted cash flows). Cost model: cost less accumulated depreciation (straight-line over useful life, typically 20-50 years) and impairment.
✅ Recognition
Recognized when property meets definition of investment property and cost can be measured reliably. Transfers to/from other categories only when there is a change in use.
📊 Presentation
Presented as a separate line item on the balance sheet (non-current asset). If fair value model used, no depreciation presented. Changes in fair value presented in income statement.
📝 Disclosure Requirements
Disclose: Measurement model (fair value or cost), fair value if cost model used, methods and assumptions for fair value, restrictions on realisability, contractual obligations, reconciliation of carrying amount.
🔗 Related Standards
IAS 16 (PPE), IFRS 13 (Fair Value Measurement), IAS 36 (Impairment)