ADVANCED FINANCIAL REPORTING

Advanced Financial Reporting and Regulation Report

Advanced Financial Reporting and Regulation Report

IAS 40 "Investment Property"

As defined in International Accounting Standard 40 "Investment Property", the category includes real property (land, buildings or parts of the building) that the owner or lessee (finance leasing) shall be treated as a source of rental income owned or maintained due to increase their value. It is also that this property was not occupied by the owner, and thus kept in possession by reason of its use in the production or supply of goods or services, as well as for administrative purposes.

The feature that distinguishes investment property from other property belonging to the fixed assets, is, amongst others extraction of cash flows (e.g. for rent), which are largely independent of other flows of economic activity, obtained in connection with the use of other assets. Property can therefore be classified in the balance of the different categories of assets and the recognition and valuation will govern various International Financial Reporting Standards. For example, the requirements of IAS 16 "Intangible assets" shall apply to property used by business entities for their own purposes (e.g. for manufacturing), in a period longer than one year. On the other hand, in the case of property produced in the ordinary course of business (e.g. business units, the construction industry), the purpose of resale shall apply the provisions of IAS 2 "Inventories". For long-term contracts for construction services performed for third parties should apply IAS 11 'Construction Contracts'.

Conceptual Framework

Resulting definition of IAS 40 is similar to the general concept of investment contained in the Accounting Act. According to this definition, the investments are assets acquired in order to achieve the economic benefits resulting from the increase in their value, get them in the form of interest income, dividends (share of profits) or other benefits, including those of a commercial transaction, and in particular financial assets and These real estate and intangible assets that are not used by the body, but have been acquired in order to achieve these benefits.

Investment property is the land or building, or part of a building or something, and another in the possession (by the owner or lessee under a finance lease) to:

receive lease payments under an operating lease,

income from capital appreciation or both,

The key to the identification of real estate as an investment property is the purpose of acquisition. For example, if the land or a building acquired for use in the production or provision of goods and services or for administrative purposes, such property shall be classified as fixed assets and accounted under IFRS (IAS) 16 (owner-occupied property), but if the purpose of acquiring favor sales in the process of doing business, then the assets are treated as commodities and are accounted for in accordance with IFRS (IAS) 2.

Examples of objects of investment property are as follows:

land intended to benefit from increasing its cost in the long run, not from its sales in the short term;

land, the further purpose of the balance sheet date has not been determined;

building owned by an organization (or under ...