The classification of certain properties as “Investment Property” for financial reporting purposes arises because its argued that the characteristics of investment properties differ sufficiently from the characteristics of owner occupied property.
Investment Property is defined in IAS 40 as…………..
“ Property (land or building – or part of a building – or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both rather than for :
§ use in the production or supply of goods or services or for administrative purpose
§ sale in the ordinary course of business”
In addition, a property interest that is held by a lessee under an operating lease may be treated as an investment property if and only if :
§ The rest of the definition of investment property is met
§ The lessee uses the fair model in IAS 40
§ The property interest held under the operating lease is accounted for as if it’s a finance lease
Investment Property IAS 40
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