Measurement and Disclosure Requirements Related to Investment Property

Investment property is a property (land or a building or part of a building or both) held (by the owner or by the lessee as a right-of-use asset) to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes; or sale in the ordinary course of business.

For the purpose of recognition, Ind AS 40, Investment Property, requires entities to adopt the cost model as the accounting policy for all investment property. This requirement leaves no alternative options for recognition other than the cost model. Consequently, investment property must consistently be valued at cost, regardless of any market fluctuations that may occur by the end of the reporting period.

This story discusses the lapses related to accounting for investment property noticed by ICAI’s Research Committee in Financial Statements of Ind AS entities and key take away from such observations from the committee.

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