intangible assets ias 38, ias 36, ifrs 3 land investment prop vortrag 2018.pdf · 29.03.2018 1...
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Intangible AssetsIAS 38, IAS 36, IFRS 3
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Agenda
1. Introduction2. Recognition
3. Measurement
4. Impairment of intangible assets (IAS 36)
Basic concept
Cash-Generating Units
5. Disclosures
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IntroductionDefinition
Intangible assets (IAS 38.8) are characterised as follows:
Identifiable
Non-monetary and without physical substance
Controlled by an entity as a result of a past event
Future economic benefits are expected to flow to the entity
If an item does not meet all the above mentioned criteria, it can not be accounted for as an intangible asset in the sense of IAS 38.8.
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IntroductionDefinition
Intangible assets can be achieved by means of:Separate acquisitionAcquisition as part of a business combination
Acquisition by way of a government grant
Exchanges of assets
Internal generation
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Agenda
1. Introduction
2. Recognition3. Measurement
4. Impairment of intangible assets (IAS 36)
Basic concept
Cash-Generating Units
5. Disclosures
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RecognitionRequirements for recognition
The recognition of an item as an intangible asset requires certain conditions:
1. Meeting the definition (IAS 38.18 in conjunction with IAS 38.8-17)
Identifiability
Control of the item by the entity
Future economic benefits
2. Meeting the general recognition requirements (IAS 38.21-23)
Expected future economic benefits are probable
Cost can be measured reliably
3. Meeting the particular recognition requirements (IAS 38.25-67) for example in case of internally generated intangible assets
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RecognitionIdentifiability (IAS 38.11-12)
Identifiability means: asset can be distinguished from goodwill
There are 2 possibilities to demonstrate the identifiability: 1. Asset is separable, ie it is capable of being separated or
divided from the entity - sale
- transfer
- licensing
- renting
- exchange
2. Contractual or legal right (regardless of whether those rights are transferable or separable from the entity)
individually or together with a related contract
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RecognitionProbable future economic benefits (IAS 38.17; 21-23)
Evidence of probable future economic benefits is based on (subjective) expectations of the management
Probability of economic benefits
• Reasonable and supportable assumptions
• Best estimates of the management
• Relating to the useful life of the asset
• External evidence with greater weight
Reliable measurement
• Generally transaction price
• Costs in case of internal generation
Further recognition requirements for internally generated intangible assets enclosed in IAS 38
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Recognition
If recognition requirements are not met: (IAS 38.68)
Expenditure on an intangible asset has to be recognised as expenses when it is incurred (expense of the period)
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RecognitionAdditional criteria in case of internal generation
Research:„original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.“ (IAS 38.8)
Development:„Application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.“ (IAS 38.8)
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RecognitionAdditional criteria in case of internal generation
Process of generating an asset
Research phase(IAS 38.54)
Meeting all the additional criteria
of IAS 38.57
Prohibition to recognise as an intangible asset
Obligation to recognise as an intangible asset
Development phase
Recognition of an internally generated intangible asset is only allowed for intangible assets resulting from the development phase.
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RecognitionSubsequent expenditures
Subsequent expenditures for intangible assets are in general expenses of the period as they normally maintain the expected future economic benefits (IAS 38.20).
Subsequent expenditures to add or to replace the intangible assets are to be treated in accordance with the general recognition requirements with IAS 38.21 (IAS 38.18).
General recognition requirements: It is probable that the expected future economic benefits that are
attributable to the asset will flow to the entity; The cost of the asset can be measured reliably.
Recognition as an intangible asset!
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Agenda
1. Introduction
2. Recognition
3. Measurement4. Impairment of intangible assets (IAS 36)
Basic concept
Cash-Generating Units
5. Disclosures
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Measurement Initial measurement
Initial measurement is dependent on the transaction to get the control: Separate acquisition (IAS 38.27 ff.)
acquisition cost incl. any directly attributable cost of preparing the asset for its use
Internal generation (IAS 38.65 ff.)
production cost (incl. borrowing costs according to IAS 23, if applicable)
Acquisition as part of a business combination (IAS 38.35 ff.)
acquisition cost based on fair value Exchange (IAS 38.45 ff.)
in general fair value of the transferred asset
Capitalization of those expenses incurred after recognition
requirements are fully met!
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Measurement Subsequent measurement
2 ways for subsequent measurement:
Cost model (IAS 38.74)
cost less any accumulated
amortisation less any accumulated
impairment losses (IAS 38.111 / IAS 36)
reversing of impairment losses (due to IAS 36)
Revaluation model (IAS 38.75 ff.) precondition: active market regular (but not annually) accumulated amortisation (after revaluation) decrease in value shall be recognised in profit or loss. However, decrease shall be recognised in
other comprehensive income to the extent ofany credit balance in the revaluation surplus in respect of this asset Reduction of theamount accumulated in equity under theheading of revaluation surplus.
increase in value to be recognised in other comprehensive income (revaluationsurplus); recognition to profit or loss to theextent that it reverses a revaluation decreaseof the same asset previously recognised in profitor loss (up to amortized cost).
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MeasurementDepreciation over the useful life
2 ways
Indefinite useful life Finite useful life
Depreciation on a systematic basis over the useful life
Impairment-testing in accordance with IAS 36 only in case of a „triggering event“
Review of the amortisation period and amortisation method at least at each financial year-end
No systematic depreciation
Impairment-testing in accordance with IAS 36 at each financial year end and in case of „triggering events“
Review of useful life assessment at least at each financial year-end
(IAS 38.107 ff.) (IAS 38.97 ff.; 104)
Subsequent measurement is determind by the useful life:
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Agenda
1. Introduction
2. Recognition
3. Measurement
4. Impairment of intangible assets (IAS 36)
Basic concept
Cash-Generating Units
5. Disclosures
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Agenda
1. Introduction
2. Recognition
3. Measurement
4. Impairment of intangible assets (IAS 36)
Basic conceptCash-Generating Units
5. Disclosures
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Basic concept
Indication that an asset may be impaired (triggering events; IAS 36.9)?
2.Need for impairment?
Calculation (estimation) of the recoverable amount + recognition of
impairment
Existence of an intangible asset: (IAS 36.10)
- not yet available for use,- with indefinite useful life, - Goodwill(no systematic depreciation)
or
yes
yes
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Basic conceptIndication for Impairment (IAS 36.12 ff.)
EXTERNAL sources of information: Significant decline of market value Significant changes in the technological, market, economic
or legal environment Increase of market interest rates or other market rates of
return on the investment Carrying amount of the net assets is more than the
market capitalisation
INTERNAL sources of information: Physical damage or obsolescence of an asset Significant changes in the manner in which an asset is
used Economic performance will be worse than expected
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Basic conceptImpairment-Testing
Recoverable amount
Higher of
Fair Value less costs to sell Value in Use
„objective” market price (IFRS 13, IAS 36.28)
Present value of future cash inflows and outflows to be derived from continuing use and net cash
flows from ultimate disposal (viewpoint of the entity; IAS 36.30ff.)
Carrying amount >
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Basic conceptImpairment-Testing: comparison of value concepts
Value in Use
Fair Value =Fair Value less costs
to sell = Market related
determination („in arm’s length transaction”) independent of an existing market price
Market related determination („in arm’s length transaction”) independent of anexisting market price
Consideration of costs to sell (legal costs, transaction taxes etc.)
Subject to presumptions and discretionary power of management with respect to valuation items (management’s best estimate)
Analogy with „Fair Value less costs to sell“ documents equivalence of external expectations and internal estimations of management
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Basic conceptImpairment-Testing: fair value less costs to sell
Basics for determination binding sale agreement
market price
best estimate (e.g. for attributable costs to sell)
Evaluation methods (decreasing hierarchy)Market value
DCF Value (Present value of cash inflows and outflows or cost savings)
Cost value (Cost of reproduction considering depreciation and obsolescence)
If fair value less costs to sell > carrying amount after deduction of accumulated depreciation and accumulated impairment losses, no further review or assessment
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Basic conceptImpairment-Testing: recognition of impairment
Reduction of the carrying amount to its recoverable amount; amortisation of the remaining carrying amount over the remaining useful life
Policy: immediate recognition in profit or loss
If: recoverable amount < carrying amount
Exception: revalued assets: (e.g. IAS 16, 38)
1. revaluation decrease debited directly to other comprehensive incomeunder revaluation surplus
2. remaining amount after full compensation of the revaluation surplus: recognition in profit or loss
+
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Basic conceptReversing an impairment loss
Review/assessment based on internal and external information at each end of the reporting period whether there is any indication that an impairment loss
recognised in prior years for an asset other than goodwill may no longer exist or may have decreased
In case of omission of former reasons for impairment
Policy: mandatory reversing of the impairment loss, recognised in profit or loss (except for goodwill)
revaluation: recognised in profit or loss up to the amount of amortized cost (as the former impairment was previously recognized in the profit or loss); the exceeding amount is credited directly to other comprehensive income (revaluation surplus).
valuation with historical cost:cap: amortised cost
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Agenda
1. Introduction
2. Recognition
3. Measurement
4. Impairment of intangible assets (IAS 36)
Basic concept
Cash-Generating Units5. Disclosures
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Cash-Generating UnitDefinition
Smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets
Cash-Generating Unit (CGU)
Recoverable amount for the individual asset not
determinable and estimable
Determination of the recoverable amount of the CGU the asset belongs to
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Cash-Generating UnitDefinition
As goodwill normally does not generate „own“ cash flows allocation of goodwill to the CGU for impairment purposes
Steps (IAS 36.65 ff.)
Definition of the CGU Estimation of the recoverable amount Allocation of goodwill to CGU Testing for impairment Impairment loss and reversing an impairment loss Recognising and measuring an impairment loss for
individual assets or goodwill by applying a CGU is heavily influenced by best estimation of management
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Agenda
1. Introduction
2. Recognition
3. Measurement
4. Impairment of intangible assets (IAS 36)
Basic concept
Cash-Generating Units
5. Disclosures
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Disclosure requirements
Disclosures regarding (IAS 36.126 ff.)
Events and circumstances that led to the recognition or reversal of the impairment loss
The amount of the impairment loss recognised or reversed
……
Additional disclosure requirements due to IFRS 3 (Business combinations: goodwill)
Additional disclosure requirements regarding cash-generating units, especially when the recoverable amount is based on value in use
Land, Leasehold rights and Buildings
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Summary of accounting for properties
Land and Buildings
Fixed assets for use inproduction/supply ofgoods/services oradministrative purposes
Current assetsheld for salein the ordinarycourse of business
CurrentNon-Current
IAS 16 Property Plant Equipment
IAS 40Investment Properties
IAS 2Inventory
Revalue tofair value
Cost Fair valueLower of cost orNet Realisable Value
Yes
No – held to earn rentalsor for capital appreciation
• Revaluation surplus• Depreciation• Impairment (IAS 36)
• Depreciation• Impairment (IAS 36)
• Changes of fair values are recorded directly to income statement
Choose either and apply to all IPsOR
Property Plant and EquipmentIAS 16
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Agenda
Scope of IAS 16
Definitions
RecognitionRecognition criteria
Component approach
Subsequent cost
MeasurementInitial measurement
Subsequent measurement
Key disclosures
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Scope
IAS 16 shall be applied in accounting for property, plant and equipment except when another Standard requires or permits a different accounting treatment
IAS 16 does not apply to (not exclusive):
property, plant and equipment classified as held for sale (IFRS 5)
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Definitions (I)
Property, plant and equipment (PP&E):tangible items that: are held for use in the production or supply of goods or
services, for rental to others, or for administrative purposes, AND
are expected to be used during more than one period Depreciation is the systematic allocation of the
depreciable amount of an asset over its useful life Depreciable amount is the cost of an asset, or
other amount substituted for cost, less its residual value
Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction
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Definitions (II)
Useful life: the period over which an asset is expected to be available for use
by an entity, OR the number of production or similar units expected to be obtained
from the asset by an entity
Carrying amount: the amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses
Residual value: the estimated amount an entity would currently obtain from disposal of an asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life
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Recognition (I)Recognition criteria
An item of PP&E is recognised as an asset when:item meets definition of a (tangible) asset,
ANDit is probable that future economic benefits
associated with the asset will flow to the entity, AND
the cost of the asset to the entity can be measured reliably
Component approach !
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Recognition (II)Component approach
Component approach
Main concept:Each material component of a composite asset with different useful lives or different patterns of depreciation is accounted for separately for the purpose of depreciation and accounting for subsequent expenditure (including replacement and renewal).
Not part of the component approach are the costs of the day-to-day servicing of the item.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.
If a component is replaced an entity recognises in the carrying amount of an item of property, plant and equipment the cost of replacing parts. The carrying amount of those parts that are replaced is derecognised.
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Recognition (III)Component approach: Example
At January 1, 2009, company D purchases a building; the cost of the building amount to € 1.000.000. An analysis shows that the building can be divided into five independent components: the roof, the lift, the security system, the bricking and the rest of the building (rest). The company decides that the roof has to be replaced every 10 years, the security system and the lift each after 5 years. The rest of the building can be used over 40 years without any major refurbishments.
The company uses the component approach. The costs of the components of the building are as follows: Roof € 200.000Lift € 100.000Security system € 20.000Bricking € 400.000Rest € 280.000
€ 1.000.000
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Recognition (IV)Component approach: Example
At December 31, 2010, the book values of therespective components are as follows :Roof € 160.000
Lift € 60.000
Security system € 12.000
Bricking € 380.000
Rest € 266.000
€ 878.000
By non-application of the component approach but instead depreciating the whole building over its expected useful life of 40 years, the book value of the building would have been € 950.000 (1.000.000-(1.000.000/40*2)
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Recognition (V)Subsequent costs
Ordinary repairs (= routine, to maintain an asset in working order): expense of the period
Extraordinary repairs (= to extend the life and/or increase the productive capacity of an asset): capitalized in one of several ways: Extend the life = extraordinary repair
debit the accumulated depreciation and credit cash or other relevant accounts
Increase the productive capacity = bettermentdebit the asset and credit cash or other relevant accounts
If the improvement is significant it may be appropriate to remove the old asset, record the gain or loss and then recognise the new asset on the books (substitution approach)
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Recognition (VI)Subsequent costs: Example
Continuing the component approach example
July 2011, the lift has to be replaced unexpectedly. The book value of the old lift amounts to € 50.000 at June 31, 2011. The new lift costs € 120.000
Using the component approach, the replacement has to be accounted for as follows:
Impairment of the old lift:
Impairment expense € 50.000
PP&E € 50.000
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Recognition (VII)Subsequent costs: Example
Recognition of the new lift:
PP&E € 120.000
Cash € 120.000
The new lift will be depreciated over its expected useful life of 5years
By non-application of the component approach: because the replacement of the lift does not lead to an increase of the operating level over the original condition of the building the cost of the new lift would have been expensed immediately
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Recognition (VIII)Probing question
What are the two conditions that must be met in order forthe cost of an item of property, plant and equipment,or an investment property, to be recognised as anasset?
1. It is improbable that future economic benefits associated withthe item will flow to the entity, and the cost of the item can bemeasured reliably.
2. It is improbable that future economic benefits associated withthe item will flow to the entity, and the cost of the item cannotbe measured reliably.
3. It is probable that future economic benefits associated with theitem will flow to the entity, and the cost of the item can bemeasured reliably.
4. It is probable that future economic benefits associated with theitem will flow to the entity, and the cost of the item cannot bemeasured reliably.
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Recognition (IX)Probing question
True or false?IAS 16 takes a component approach to
depreciation, meaning each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item will be depreciated separately.
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Recognition (X)Probing question
True or false?Property, plant and equipment are tangible items that
are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and that are not expected to be used during more than one period.
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Measurement (I)Initial measurement
An item of PP&E which qualifies for recognition as an asset should initially be measured at its
Purchase price, including cost directly attributable of bringing the assetto working condition and cost of its dismantlement, removal or restoration
When payment is deferred, cost is the cash price equivalent
Cost of a self-constructed asset is determined using the same principles as for an acquired asset
cost
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Measurement (II)Initial measurement
Acquisition price+ Inward duties/import duties+ Other non-deductible or non-reimbursable
taxes+ Transportation costs+ Handling and processing costs+ Additional costs directly attributable to the
acquired asset- Reductions in acquisition price+
Acquisition costs(Borrowing costs)
=
The cost of an item of property, plant and equipment includes the costs of its dismantlement, removal or restoration (IAS 16). Recognition of a corresponding provision if criteria in IAS 37 are met
Acquisition cost
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Measurement (III)Subsequent measurement
Carried at cost less accumulateddepreciation and accumulatedimpairmentlosses
Carried at revalued amount(fair value) lessaccumulateddepreciation andaccumulatedimpairment losses
Carried at revalued amount(fair value) less
accumulatedamortisation andaccumulatedimpairment losses
Cost Model Revaluation Model
Special requirements for subsequent measurement
Carried at revalued amount(fair value) lessaccumulatedamortisation andaccumulatedimpairment losses
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Measurement (IV)Subsequent measurement
Cost modelMeasurement at cost less accumulated depreciation and impairment
Depreciation
Depreciation method
Depreciation volume
Cost less residual value
Impairment/ reversal of an impairment lossin accordance with IAS 36
Depreciation period
Over its useful life
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Measurement (V)Subsequent measurement
Revaluation Model Asset carried at revalued amount less subsequent accumulated
depreciation and subsequent accumulated impairment losses Revaluation for the whole class of assets Revaluations shall be made with sufficient regularity Increase in carrying amount as a result of revaluation -> OCI
(except for a reverse of prior revaluation decrease -> P/L) Decrease in carrying amount as a result of revaluation -> P/L
(except for a reverse of prior revaluation surplus -> OCI)
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Measurement (IX)Probing question
Identify the formula for determining the cost of an item of property, plant and equipment, according to the standard if:
C = CostP = Purchase price, including import duties and non-refundable
purchase taxes T = Trade discountsR = Rebates A = Any costs directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the manner intended by management
1. C = P – T – R – A2. C = P – T – A3. C = P – T – R 4. C = P – T – R + A
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Key disclosures
Measurement basis Depreciation methods Useful lives or depreciation rates Gross carrying amount and accumulated depreciation at beginning
and end of the period reconciliation of the carrying amount at the beginning and end of the
period Comparative information is required Existence and amounts of restrictions on title to assets PPE pledged as securities for liabilities The amount of expenditures on account for PPE in the course of
construction Commitments for acquisition of PPE Compensation from third parties Additional disclosures when using revaluation model
Accounting for investment property IAS 40
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Definitions
Investment property is defined as property held to earn rentals or for capital appreciation or both
As such it generates cash flows largely independent from other assets held by the entity
Owner-occupied properties are NOT investment properties. These are governed by IAS 16 –PP&E
IAS 40 lists specific examples of land and buildings that are covered by IAS 40, and further examples that are NOT covered by IAS 40.
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Investment PropertyDefinition (cont’d)
The following are examples of investment property:
Land held for long- term capital appreciation rather than for short-term sale in the ordinary course of business.
Land held for a currently undetermined future use.
A building owned by the entity (or held by the entity under a finance lease) and leased out under one or more operating leases.
A building that is vacant but is held to be leased out under one or more operating leases.
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The following are examples of items that are not investment property:
Property intended for sale in the ordinary course of business or in the process of construction or development for such sale (IAS 2 Inventories).
Property being constructed or developed on behalf of third parties
Owner occupied property including (among other things) property held for future use as owner-occupied, property held for future development and subsequent use as owner occupied property, property occupied by employees (whether or not employees pay rent at market rates) and owner occupied property awaiting disposal.
Investment PropertyDefinition (cont’d)
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Partially owner-occupied property
Land or buildings held partly as investment property and partly owner-occupied have to be accounted separately, if able to split, owner-occupied property IAS 16
for rental IAS 40otherwise accounting for dominant purpose
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Investment propertiesIAS 40 Fair value model
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Investment PropertyMeasurement
Initially, an investment property shall be measured at its cost
Subsequently, an enterprise should choose either the ‘fair value model’ or the ‘cost model’
This should be applied to all investment property
Property interest held under an operating lease can be classified as an investment property :
Initial costs is the lower of the fair value of the property and the present value of the minimum lease payments
Only the fair value model is to be applied
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Investment propertyMeasurement – fair value model
What is fair value for IP? (IFRS 13)
..the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
Exit value
Highest and best use
A gain or loss arising from a change in fair value should be included in the same period income statement
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Investment property under constructionMeasurement
IAS 40
Completed investment property and those being redeveloped plus investment
property being constructed for which fair value can be reliably estimated.
Investment property being constructed for which fair value
cannot be reliably estimated.
Same historical cost model as IAS 16.
Fair value with changes in fair value taken to profit or loss.
Cost in accordance with IAS 16 until either its fair value becomes reliably determinable or construction is completed (whichever comes earlier) after which it is measured at fair value.
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Derecognition
Assets should be derecognized from the balance sheet on disposal or when they are permanently withdrawn from use and no future economic benefits are expected from disposal.
A disposal is achieved upon sale or by entering into a finance lease
Gains and losses on retirement or disposal should be taken to the income statement, measured at the difference between: The asset’s carrying value, and The net disposal proceeds
Rental guarantees given may delay revenue recognition.!
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When Land & Buildings Change Balance Sheet Classification (IAS 40.57)
From To When Accounting treatment
Investment property carried at fair value
Owner-occupied property
Commencement of owner-occupation
Deemed cost for subsequent accounting shall be fair value at the date of change in use
Investment property carried at fair value
Inventories Commencement of development with a view to sale
Deemed cost for subsequent accounting shall be fair value at the date of change in use
Owner-occupied property
Investment property carried at fair value
End of owner-occupation
Adjustment to fair value at date of change is treated as a revaluation
Inventories Investment property carried at fair value
Commencement of an operating lease
Adjustment to fair value at date of change is recognised in P&L
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Disclosures relating to investment properties
Requirements of IAS 40 model (fair value/cost) used for valuing investment property. If cost
model is used, the fair value has to be disclosed. whether, and in what circumstances, are operating leases accounted
for as investment properties. criteria used to distinguish investment property from owner occupied
property and inventories. methods and significant assumptions applied in determining the fair
value the extent to which the fair value is based on valuation by an
independent, qualified valuer. details of amounts recognised in profit or loss. existence and amounts of restrictions on realisablity of investment
property or on remittance of income and disposal proceeds. contractual obligations to purchase, construct or develop investment
properties or for repairs, maintenance or enhancements.
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Disclosures relating to investment properties (cont’d)
In addition to the disclosures required by IAS 40, IAS 1 requires disclosure of significant judgements and estimates.
Some common areas where accounting judgements (other than estimates) could be involved are:
Determining whether property is investment property or not, based on the length of the entity’s operating cycle
What is « significant » in the context of property that is partly owner-occupied?
When is property under development complete?
Is property under the scope of IFRS 5 subject to the disclosures for the fair valuation assumptions?
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Investment propertiesIAS 40 Cost model
… generally follow rules of PPE
LeaseIAS 17
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Lease classification
Lease is classified as either a finance lease or an operating lease
A finance leasetransfers
substantially all the risks and
rewards incident to ownership of
an asset
An operating lease is a lease other than a finance lease
Starting 2019 IFRS 16 is to be applied!
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Leases of land and buildings
Finance lease
Classification rules are the same as the ones for leases for other assets.
The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification.
If title to both elements is expected to pass to the lessee by the end of the lease term, land and building are classified as a finance lease.
Separate measurement of the land and buildings elements is not required when the lessee’s interest in both land and buildings is classified as an IP accounted for IAS 40 FV model
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Operating lease for the lessor
The IP remains in the books of the lessor
Lease income is recognised on a straight-line basis over the lease term even if the receipts are not on such a basis.
Costs incurred in earning the lease income (eg. depreciation) are recognised as an expense.
Costs for services such as insurance and maintenance are expenses and related receipts for services are recognized in income when incurred
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Operating lease for the lessor (cont’d)
Initial direct costs incurred by lessors in negotiating and arranging an operating lease (leasing commissions) shall be capitalised to the cost basis of the leased asset and amortised over the lease term on the same basis as the lease income (i.e. straight-line basis). The same rule applies for rent-free period, up-front cash payments, sundry reimbursements for relocation costs, leasehold improvements and other incentives.
If IP valued with cost model, then depreciation policies in accordance with IAS 16
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Outlook to IFRS 16
No adjustments for lessors, except for sub-lessors
Changes for lessees:
► Do not restate comparative periods► Lease liability = present value of
remaining lease payments ► Choice of measurement of ROU asset ► Impairment test ROU assets► Consider use of transition
requirements and practical expedients
► Carry forward asset and lease liability from IAS 17 Leases
Existing operating leasesExisting finance
leases