DEPARTMENT OF ACCOUNTANCYAccounting 2A2013Unit 3: Investment Property (IAS 40)Index PageA General 2B Question relating to this topic 3
- 2 -A. GENERAL1. INTRODUCTION OF THE TOPICInvestment properties are non-current assets (land or a building or a part of a building or both) thatan entity controls and holds over a period of time (normally longer than one reporting period) to earnrental income and/or gain from capital appreciation.The main accounting issues are the timing of the recognition, the measurement of the carryingamount, the choosing of an accounting model (historical cost or fair value) and the recognitionthereof.During your first year you already learned how to:recogniseand measure investment properties using the fair value model.presentand disclose investment properties in financial reports.During your second year these topics will be elaborated upon.You must study the objective, scope and definitions of IAS 40.You must again study how to,recognise, present and disclose investment properties in the required manner.Revaluations are not discussed in Accounting 2A.2. PRIOR KNOWLEDGEStudents should already be able toidentify, recognise, present and disclose investment properties inthe financial statements using the fair value accounting model.3. RESOURCESIn order to master this topic you should make use of the following resources (and in the statedorder):3.1 Chapter 4 Introduction to IFRS.3.2 Class notes.3.3 Questions in IFRS applications (refer section B).3.4 Questions in the question bank (refer section B).
- 3 -4. STUDY OUTCOMESAfter you have completed your studies of this topic you must be able to:• explain the objective and scope of the statement; identify an investment property; differentiate between an investment property and an owner-occupied property; determine the cost price of an investment property at the acquisition date; understand that investment properties can be recognised by applying the cost model or thefair value model, and be able to determine the carrying amount of investment property undereach of the models; recognise investment properties in terms of IAS 40 Investment property; and presentand disclose investment properties in financial reports.5. EXAMINATION POSSIBILITIESThis topic will be assessed in any the following ways:• theoreticalor application questions involving case studies;• individual questions requiring specialised calculations of investment properties;• journals to recogniseinvestment properties; and• a Financial Statementsquestion involving identification, recognition, presentationand disclosure.B. QUESTIONS RELATING TO THIS TOPICQUESTIONS IN IFRS APPLICATIONSDo the following examples and questions:Examples:- Examples 40 (135).1 – Ignore tax implications- Examples 40 (135).2