Questions and Answers
What is the total initial cost of the investment property?
$60 million
What is the profit or loss for the year ended 31 March 2017?
$2 million
How much will be charged to profit or loss for the year 2017?
$400,000
In the statement of financial position, what is the value of the land component?
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What is the value of the buildings component?
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Study Notes
IAS (40) Investment Property Overview
- Investment property refers to land or buildings held to earn rentals or for capital appreciation.
- Under IAS 40, investment properties are measured at cost less accumulated depreciation and any impairment losses.
Key Components of the Building
- Top three floors of the building are classified separately as a component of the overall investment.
- Remainder of the building is divided into:
- Buildings component valued at 20.
- Land component valued at 25.
Financial Aspects
- Total initial cost for the investment property is recorded at 60.
- Profit or loss for the year ending 31 March 2017 reflects an amount of $2 million.
- Depreciation expense for 2017 is calculated at $400,000, derived from $20 million allocated over a 50-year useful life.
Reporting Requirements
- Depreciation charge is recognized in the profit or loss section of the financial statement.
- Relevant financial position information must be accurately presented to reflect the net asset value of the investment property.
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Description
Test your knowledge on IAS (40) Investment Property as featured in the June 2017 ACCA Diploma in IFRS exam. This quiz covers key concepts, questions, and answers related to the standards and financial positions involved. Prepare for your exam and ensure you understand the implications of investment property accounting.
