ACCA SBR ^UK Syllabus C. Reporting The Financial Performance Of A Range Of Entities - Investment property Part 3 - Notes ^{12 / 16}

This bit deals with when we decide say to use it as a normal property instead of renting it out or vice-versa etc.

Examples

1. We occupy and start to use the investment property

   All owner-occupied property falls under IAS 16 - cost less depreciation and impairment losses.

   If the FV model was being used then the FV at change of use date is the deemed cost for future accounting.

2. Start developing an investment property with the intention of selling it when finished

   The property is to be sold in the normal course of business and should therefore be reclassified as inventory and accounted for under IAS 2 Inventories.

3. Start developing an investment property with the intention of letting it out when finished

   The property should continue to be held as an investment property under IAS 40.

4. We were using the building but now we are going to let it out when finished

   Transfer to investment properties and account under IAS 40.
   When we transfer it though (if FV model) we revalue it. 

   Any revaluation here goes to the Revaluation reserve and OCI as normal (not the income statement as under IAS 40).

5. A property that was originally held as inventory has now been let to a third party.

   Transfer from inventory to investment properties.

   Here when the transfer is made, we revalue (if FV model) to FV and any difference goes to the income statement.