IFRS Standard: IAS 40 Investment property

IAS 40 Investment Property applies to the accounting for property (land and/or buildings) held to earn rentals or for capital appreciation (or both). Investment properties are initially measured at cost and, with some exceptions. may be subsequently measured using a cost model or fair value model, with changes in the fair value under the fair value model being recognised in profit or loss.

IAS 40 Objective Scope Definitions


1 The objective of this Standard is to prescribe the accounting treatment for investment property and related disclosure requirements.


2 This Standard shall be applied in the recognition, measurement and disclosure of investment property.

3 [Deleted]

4 This Standard does not apply to:

  1. biological assets related to agricultural activity (see IAS 41 Agriculture and IAS 16 Property,
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IAS 40 Investment or owner-occupied property

Classification of property as investment property or owner-occupied property

6 [Deleted]

7 Investment property is held to earn rentals or for capital appreciation or both. Therefore, an investment property generates cash flows largely independently of the other assets held by an entity. This distinguishes investment property from owner-occupied property. The production or supply of goods or services (or the use …

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IAS 40 Recognition

16 An owned investment property shall be recognised as an asset when, and only when:

  1. it is probable that the future economic benefits that are associated with the investment property will flow to the entity; and
  2. the cost of the investment property can be measured reliably.

17 An entity evaluates under this recognition principle all its investment property costs at …

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IAS 40 Measurement at recognition

20 An owned investment property shall be measured initially at its cost. Transaction costs shall be included in the initial measurement.

21 The cost of a purchased investment property comprises its purchase price and any directly attributable expenditure. Directly attributable expenditure includes, for example, professional fees for legal services, property transfer taxes and other transaction costs.

22 …

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IAS 40 Measurement after recognition

Accounting policy

30 With the exception noted in paragraph 32A, an entity shall choose as its accounting policy either the fair value model in paragraphs 33–55 or the cost model in paragraph 56 and shall apply that policy to all of its investment property.

31 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors states that a …

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IAS 40 Transfers

57 An entity shall transfer a property to, or from, investment property when, and only when, there is a change in use. A change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. In isolation, a change in management’s intentions for the use of

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IAS 40 Disposals

66 An investment property shall be derecognised (eliminated from the statement of financial position) on disposal or when the investment property is permanently withdrawn from use

67 The disposal of an investment property may be achieved by sale or by entering into a finance lease. The date of disposal for investment property that is sold is the date the …

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IAS 40 Disclosure

Fair value model and cost model

74 The disclosures below apply in addition to those in IFRS 16. In accordance with IFRS 16, the owner of an investment property provides lessors’ disclosures about leases into which it has entered. A lessee that holds an investment property as a right-of-use asset provides lessees’ disclosures as required by IFRS 16 and lessors’ …

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IAS 40 Transitional provisions

Fair value model

80 An entity that has previously applied IAS 40 (2000) and elects for the first time to classify and account for some or all eligible property interests held under operating leases as investment property shall recognise the effect of that election as an adjustment to the opening balance of retained earnings for the period in which the

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