IAS 40

In this lesson

1. 0:00 Investment property definition and scope
2. 1:00 What does not qualify as investment property
3. 2:00 Initial recognition and measurement at cost
4. 2:41 Subsequent measurement choice cost or fair value
5. 3:53 Transfers between property categories
6. 5:03 Disposal and derecognition of investment property
7. 5:34 Disclosure requirements for investment properties
8. 6:13 Worked example cost model versus fair value

About this lesson

You'll understand what qualifies as an investment property, how to distinguish it from owner-occupied property or inventory, and why this classification matters for your financial statements. The lesson covers the recognition and initial measurement of investment properties at cost, including transaction costs and directly attributable expenditure. You'll then explore the two subsequent measurement options: the cost model, which works like IAS 16 with depreciation and impairment, and the fair value model, which reflects the asset at market value each year with gains and losses flowing through profit or loss. A key difference is that fair value gains and losses are operational, not revaluation surpluses. You'll also learn how to handle transfers in and out of investment property status. When property changes use—from owner-occupied to investment property, or vice versa—the fair value at the transfer date becomes your starting point. The lesson includes a worked example showing how ABC company's rental property would be accounted for under both measurement models, illustrating the practical impact of your chosen accounting policy on both the balance sheet and profit or loss.

Duration: 7m