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    Case Study 1

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    Babu babu
    The document discusses properties owned by XYZ Inc. and its subsidiaries and whether they qualify as investment properties under IAS-40. Properties described in items (a), (b), and (e) qualify as investment properties as they are held for rental or capital appreciation. Property in item (c) should be treated as inventory under IAS-2, while item (d) is a long-lived asset under IAS-16.

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    Case Study 1

    Uploaded by

    Babu babu
    239 views1 page
    The document discusses properties owned by XYZ Inc. and its subsidiaries and whether they qualify as investment properties under IAS-40. Properties described in items (a), (b), and (e) qualify as investment properties as they are held for rental or capital appreciation. Property in item (c) should be treated as inventory under IAS-2, while item (d) is a long-lived asset under IAS-16.

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    Case Study 1 (2).docx

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    The document discusses properties owned by XYZ Inc. and its subsidiaries and whether they qualify as investment properties under IAS-40. Properties described in items (a), (b), and (e) qualify as investment properties as they are held for rental or capital appreciation. Property in item (c) should be treated as inventory under IAS-2, while item (d) is a long-lived asset under IAS-16.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    239 views1 page

    Case Study 1

    Uploaded by

    Babu babu
    The document discusses properties owned by XYZ Inc. and its subsidiaries and whether they qualify as investment properties under IAS-40. Properties described in items (a), (b), and (e) qualify as investment properties as they are held for rental or capital appreciation. Property in item (c) should be treated as inventory under IAS-2, while item (d) is a long-lived asset under IAS-16.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    IAS-40: Investment Property

    XYZ Inc. and its subsidiaries have provided you, their International Financial Reporting
    Standards (IFRS) specialist, with a list of the properties they own:

    a) Land held by XYZ Inc. for undetermined future use


    b) A vacant building owned by XYZ Inc. and to be leased out under an operating lease
    c) Property held by a subsidiary of XYZ Inc., a real estate firm, in the ordinary course of its
    business
    d) Property held by XYZ Inc. for the use in production
    e) A hotel owned by ABC Inc., a subsidiary of XYZ Inc., and for which ABC Inc. provides
    security services for its guests’ belongings

    Required:

    Advise XYZ Inc. and its subsidiaries as to which of the above-mentioned properties would
    qualify under IAS-40 as investment properties. If they do not qualify thus, how should they be
    treated under IFRS?

    Model Solution

    Properties described under items (a), (b), and (e) would qualify as investment properties under
    IAS -40. With respect to item (e), it is to be noted that IAS- 40 requires that when the ancillary
    services are provided by the entity and they are considered relatively insignificant component of
    the arrangement, then the property is considered an investment property.

    These properties qualify as investment properties because they are being held for rental or for
    capital appreciation as opposed to actively managed properties that are used in the production of
    goods.

    Property described in item (c) is to be treated as “inventory” under IAS -2.

    Property described in item (d) is treated as a long-lived asset under IAS -16.

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