IAS 40 Investment Property

International Accounting Standard 40

Overview of IAS 40

  • Issued: in 2000; re-issued in 2003, followed by amendments
  • Effective date: 1 January 2005
  • What it does:
    • IAS 40 defines investment property as property (land, building, part of a building or both) held to earn rentals or for capital appreciation or both, regardless the way of holding it (by the owner or under the finance lease as the lessee).
    • It brings examples of what the investment property is and what it is not.
    • Further classification issues are addressed, e.g.:
      • Property partially earning rentals and partially held for own use,
      • Ancillary services,
      • Intercompany rentals, etc.
    • It prescribes rules for recognition and measurement of investment property.
    • Investment property shall be at its recognition measured at cost.
    • For subsequent measurement, 2 models are allowed:
      1. Fair value model – investment property is carried at fair value; or
      2. Cost model – investment property is carried in line with IAS 16.
      3. IAS 40 deals also with transfers of investment property, disposals of investment property and prescribes number of disclosures.

Articles about IAS 40

For more closely related articles, please revise IAS 16 here.

Questions and Answers

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