Indian Accounting Standard (Ind AS) 40, Summary
Investment property is property (land or building) held to earn rentals or for capital appreciation, or both.
A portion of a dual-use property is classified as investment property only if that portion could be sold or leased out under a finance lease. Otherwise, the entire property is classified as property, plant and equipment unless the portion of the property used for own use is insignificant.
If a lessor provides ancillary services and those services are a relatively insignificant component of the arrangement as a whole, then the property is classified as investment property.
An owned investment property is initially recognised at cost. Transaction costs shall be included in the initial measurement.
After initial recognition, an investment property is measured as follows:
– In accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, where it meets the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale)
– In accordance with Ind AS 116, Leases where it is held by a lessee as a Right-Of-Use (ROU) asset and is not held for sale in accordance with Ind AS 105
– In accordance with requirements of Ind AS 16, Property, Plant and Equipment for cost model in all other cases.
Subsequent expenditure is capitalised only if it is probable that it will give rise to future economic benefits.
Transfers to or from investment property are made only if there has been a change in the use of the property.
The intention to sell an investment property without redevelopment does not justify reclassification from investment property into inventory, the property continues to be classified as investment property until disposal unless it is classified as held-for-sale.
Disclosure of the fair value of all investment property is required.