{"id":23261,"date":"2019-08-21T18:30:16","date_gmt":"2019-08-21T13:00:16","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=23261"},"modified":"2019-08-21T12:08:31","modified_gmt":"2019-08-21T06:38:31","slug":"ind-as-40-accounting-for-investment-property","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/ind-as-40-accounting-for-investment-property\/","title":{"rendered":"Indian Accounting Standard 40 – Accounting for Investment Property"},"content":{"rendered":"

An investment property<\/a> is a property that has been purchased to earn the return either through rental income or to resale the property which has been purchased. In Indian Accounting<\/a> Standard there is a prescribed standard mentioned for accounting treatment for an investment property i.e. IND-AS 40<\/strong>. The main objective of this standard is to keep common accounting treatment and this standard deals with recognition, measurement, and disclosure of investment property.<\/p>\n\n\n\n

Let’s understand the Common Terms prescribed under IND-AS 40<\/h2>\n\n\n\n

“Investment\nProperty” <\/strong>is a property held by\nthe owner or lessee to earn rentals or for capital appreciation<\/a>.<\/p>\n\n\n\n

“Fair\nValue” <\/strong>is the price that would be\nreceived to sell an asset or paid to transfer a liability in an orderly\ntransaction between market<\/a> participants at the measurement date.<\/p>\n\n\n\n

“Carrying Amount” <\/strong>is the amount at which an asset is recognized in the balance sheet.<\/p>\n\n\n\n

“Cost<\/strong>”\nis the amount of cash or cash equivalents paid or the fair value of other\nconsideration given to acquire the asset at the time of its acquisition or\nconstruction, where applicable, the amount attributed to that asset when\ninitially recognized in accordance with specific requirements of other IND-AS.<\/p>\n\n\n\n

Classification of Property<\/h2>\n\n\n\n

Investment Property: <\/strong>It is the property held by the owner or lessee to earn rental or capital appreciation or both. The investment<\/strong>[1]<\/a><\/sup> property generates cash flow independently through production or supply of goods or service that is attributable not only to property but also the asset utilized in the production or supply process. This is the reason it differs from the owner-occupied property.<\/p>\n\n\n\n

Following\nare the example of Investment Property<\/em><\/p>\n\n\n\n

  1. The Land purchased\nfor the long term purpose in the ordinary course of the business.<\/li>
  2. A building is\nowned by the entity and leases out for a certain period of time under an\noperating lease.<\/li>
  3. Property that\nis being constructed or developed for future use as an investment property.<\/li><\/ol>\n\n\n\n

    Owner-Occupied\nProperty: <\/strong>It is the property which\nis held by the entity or owner for use in production or supply of goods or\nservice or administrative purpose.<\/p>\n\n\n\n

    When the Investment Property shall be\nrecognized?<\/h2>\n\n\n\n

    In IND-AS\n40 recognition of Investment property mentioned below:<\/em><\/p>\n\n\n\n