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    Fair Value Model

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    Zes O
    Investment property is initially measured at fair value, with changes in fair value recognized in profit or loss for the period. Fair value is the price that would be received in an orderly transaction between market participants at the measurement date. The best evidence of fair value is current prices in an active market for similar properties, and in the absence of this data alternative valuation methods can be used. There is a presumption that fair value can be reliably determined, but if not the cost model may be used until disposal of the property.

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    Fair Value Model

    Uploaded by

    Zes O
    37 views2 pages
    Investment property is initially measured at fair value, with changes in fair value recognized in profit or loss for the period. Fair value is the price that would be received in an orderly transaction between market participants at the measurement date. The best evidence of fair value is current prices in an active market for similar properties, and in the absence of this data alternative valuation methods can be used. There is a presumption that fair value can be reliably determined, but if not the cost model may be used until disposal of the property.

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    Investment property is initially measured at fair value, with changes in fair value recognized in profit or loss for the period. Fair value is the price that would be received in an orderly transaction between market participants at the measurement date. The best evidence of fair value is current prices in an active market for similar properties, and in the absence of this data alternative valuation methods can be used. There is a presumption that fair value can be reliably determined, but if not the cost model may be used until disposal of the property.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    37 views2 pages

    Fair Value Model

    Uploaded by

    Zes O
    Investment property is initially measured at fair value, with changes in fair value recognized in profit or loss for the period. Fair value is the price that would be received in an orderly transaction between market participants at the measurement date. The best evidence of fair value is current prices in an active market for similar properties, and in the absence of this data alternative valuation methods can be used. There is a presumption that fair value can be reliably determined, but if not the cost model may be used until disposal of the property.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Fair value model

    Investment property is remeasured at fair value, which is 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. [IAS 40.5] Gains or losses
    arising from changes in the fair value of investment property must be included in
    net profit or loss for the period in which it arises. [IAS 40.35]

    Fair value should reflect the actual market state and circumstances as of the
    balance sheet date. [IAS 40.38] The best evidence of fair value is normally given
    by current prices on an active market for similar property in the same location
    and condition and subject to similar lease and other contracts. [IAS 40.45] In the
    absence of such information, the entity may consider current prices for properties
    of a different nature or subject to different conditions, recent prices on less active
    markets with adjustments to reflect changes in economic conditions, and
    discounted cash flow projections based on reliable estimates of future cash flows.
    [IAS 40.46]

    There is a rebuttable presumption that the entity will be able to determine the
    fair value of an investment property reliably on a continuing basis. However: [IAS
    40.53]

    If an entity determines that the fair value of an investment property under


    construction is not reliably determinable but expects the fair value of the
    property to be reliably determinable when construction is complete, it measures
    that investment property under construction at cost until either its fair value
    becomes reliably determinable or construction is completed. If an entity
    determines that the fair value of an investment property (other than an
    investment property under construction) is not reliably determinable on a
    continuing basis, the entity shall measure that investment property using the cost
    model in IAS 16. The residual value of the investment property shall be assumed
    to be zero. The entity shall apply IAS 16 until disposal of the investment property.

    Where a property has previously been measured at fair value, it should continue
    to be measured at fair value until disposal, even if comparable market
    transactions become less frequent or market prices become less readily available.
    [IAS 40.55]

    Cost model

    After initial recognition, investment property is accounted for in accordance with


    the cost model as set out in IAS 16 Property, Plant and Equipment – cost less
    accumulated depreciation and less accumulated impairment losses. [IAS 40.56]

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