Question 4 - Part b

In this lesson

1. 0:01 Investment properties accounting treatment
2. 2:22 Impact on statement of financial position
3. 5:36 Impact on statement of profit or loss
4. 8:53 Cash flow and disclosure requirements
5. 9:52 Structuring your answer for markers

About this lesson

Investment properties can be measured using either the fair value model (revalued annually with changes through profit or loss, no depreciation) or the cost model (measured at cost less depreciation), and this choice significantly affects how investors perceive your company's efficiency, profitability, and risk profile. You'll work through how each accounting policy impacts the statement of financial position, profit or loss, and cash flows. Under fair value, rising property prices increase asset values and equity while reducing gearing—making the company look stronger but potentially less efficient. Under the cost model, lower asset values and more predictable profits reduce volatility but may understate asset worth. The lesson covers why companies often use alternative performance measures like EBITDA to strip out these policy effects, why fair value must always be disclosed even when using cost, and how to structure your answer with clear headings and short, focused paragraphs that show the marker exactly what you're addressing.

Duration: 11m