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- FRS 140 Investment Property
Transfers
57. | Transfers to, or from, investment property shall be made when, and only when, there is a change in use, evidenced by:
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58. | Paragraph 57(b) requires an entity to transfer a property from investment property to inventories when, and only when, there is a change in use, evidenced by commencement of development with a view to sale. When an entity decides to dispose of an investment property without development, it continues to treat the property as an investment property until it is derecognised (eliminated from the balance sheet) and does not treat it as inventory. Similarly, if an entity begins to redevelop an existing investment property for continued future use as investment property, the property remains an investment property and is not reclassified as owner-occupied property during the redevelopment. | ||||||||||
59. | Paragraphs 60-65 apply to recognition and measurement issues that arise when an entity uses the fair value model for investment property. When an entity uses the cost model, transfers between investment property, owner-occupied property and inventories do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purposes. | ||||||||||
60. | For a transfer from investment property carried at fair value to owner-occupied property or inventories, the property's deemed cost for subsequent accounting in accordance with FRS 116 or FRS 102 shall be its fair value at the date of change in use. | ||||||||||
61. | If an owner-occupied property becomes an investment property that will be carried at fair value, an entity shall apply FRS 116 up to the date of change in use. The entity shall treat any difference at that date between the carrying amount of the property in accordance with FRS 116 and its fair value in the same way as a revaluation in accordance with FRS 116. | ||||||||||
62. | Up to the date when an owner-occupied property becomes an investment property carried at fair value, an entity depreciates the property and recognises any impairment losses that have occurred. The entity treats any difference at that date between the carrying amount of the property in accordance with FRS 116 and its fair value in the same way as a revaluation in accordance with FRS 116. In other words:
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63. | For a transfer from inventories to investment property that will be carried at fair value, any difference between the fair value of the property at that date and its previous carrying amount shall be recognised in profit or loss. | ||||||||||
64. | The treatment of transfers from inventories to investment property that will be carried at fair value is consistent with the treatment of sales of inventories. | ||||||||||
65. | When an entity completes the construction or development of a self-constructed investment property that will be carried at fair value, any difference between the fair value of the property at that date and its previous carrying amount shall be recognised in profit or loss. |
Disposals
66. | An investment property shall be derecognised (eliminated from the balance sheet) on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. | ||||||||
67. | The disposal of an investment property may be achieved by sale or by entering into a finance lease. In determining the date of disposal for investment property, an entity applies the criteria in FRS 1182004 for recognising revenue from the sale of goods and considers the related guidance in the Appendix to FRS 1182004. FRS 117 applies to a disposal effected by entering into a finance lease and to a sale and leaseback. | ||||||||
68. | If, in accordance with the recognition principle in paragraph 16, an entity recognises in the carrying amount of an asset the cost of a replacement for part of an investment property, it derecognises the carrying amount of the replaced part. For investment property accounted for using the cost model, a replaced part may not be a part that was depreciated separately. If it is not practicable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement as an indication of what the cost of the replaced part was at the time it was acquired or constructed. Under the fair value model, the fair value of the investment property may already reflect that the part to be replaced has lost its value. In other cases it may be difficult to discern how much fair value should be reduced for the part being replaced. An alternative to reducing fair value for the replaced part, when it is not practical to do so, is to include the cost of the replacement in the carrying amount of the asset and then to reassess the fair value, as would be required for additions not involving replacement. | ||||||||
69. | Gains or losses arising from the retirement or disposal of investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognised in profit or loss (unless FRS 117 requires otherwise on a sale and leaseback) in the period of the retirement or disposal. | ||||||||
70. | The consideration receivable on disposal of an investment property is recognised initially at fair value. In particular, if payment for an investment property is deferred, the consideration received is recognised initially at the cash price equivalent. The difference between the nominal amount of the consideration and the cash price equivalent is recognised as interest revenue in accordance with FRS 1182004 using the effective interest method. | ||||||||
71. | An entity applies FRS 1372004 or other Standards, as appropriate, to any liabilities that it retains after disposal of an investment property. | ||||||||
72. | Compensation from third parties for investment property that was impaired, lost or given up shall be recognised in profit or loss when the compensation becomes receivable. | ||||||||
73. | Impairments or losses of investment property, related claims for or payments of compensation from third parties and any subsequent purchase or construction of replacement assets are separate economic events and are accounted for separately as follows:
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Disclosure
Fair Value Model and Cost Model
74. | The disclosures below apply in addition to those in FRS 117. In accordance with FRS 117, the owner of an investment property provides lessors' disclosures about leases into which it has entered. An entity that holds an investment property under a finance or operating lease provides lessees' disclosures for finance leases and lessors' disclosures for any operating leases into which it has entered. | ||||||||||||||||||||||||
75. | An entity shall disclose:
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75A. | An entity may have treated its investment property in accordance with MASB Approved Accounting Standard IAS 16 Property, Plant and Equipment as permitted in FRS 1252004 Accounting for Investments. In this case if the entity has availed itself the transitional provision in MASB Approved Accounting Standard IAS 16 Property, Plant and Equipment it shall disclose that fact. By virtue of that transitional provision, upon implementation in 1998 of MASB Approved Accounting Standard IAS 16 for the first time, an entity that had recorded its property, plant and equipment at revalued amounts but had not adopted a policy of revaluation has been allowed to continue carrying those assets on the basis of their previous revaluations subject to continuity in its depreciation policy and the requirement to write down the assets to their recoverable amounts for impairment adjustments. | ![]() | added |
Fair Value Model
76. | In addition to the disclosures required by paragraph 75, an entity that applies the fair value model in paragraphs 33-55 shall disclose a reconciliation between the carrying amounts of investment property at the beginning and end of the period, showing the following:
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77. | When a valuation obtained for investment property is adjusted significantly for the purpose of the financial statements, for example to avoid double-counting of assets or liabilities that are recognised as separate assets and liabilities as described in paragraph 50, the entity shall disclose a reconciliation between the valuation obtained and the adjusted valuation included in the financial statements, showing separately the aggregate amount of any recognised lease obligations that have been added back, and any other significant adjustments. | ||||||||||||||
78. | In the exceptional cases referred to in paragraph 53, when an entity measures investment property using the cost model in FRS 116, the reconciliation required by paragraph 76 shall disclose amounts relating to that investment property separately from amounts relating to other investment property. In addition, an entity shall disclose:
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Cost Model
79. | In addition to the disclosures required by paragraph 75, an entity that applies the cost model in paragraph 56 shall disclose:
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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 interest held under operating leases as investment property shall recognise the effect of that election Under the fair value model, an entity shall report the effect of adopting this Standard on its effective date (or earlier)2 as an adjustment to the opening balance of retained earnings for the period in which the election is first made. In addition:
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81. | This Standard requires a treatment different from that required by FRS 108. FRS 108 requires comparative information to be restated unless such restatement is impracticable. | ||||||||
82. | When an entity first applies this Standard, the adjustment to the opening balance of retained earnings includes the reclassification of any amount held in revaluation surplus for investment property. |
2 This Standard uses the transitional provision in the original IAS 40 instead of IAS 40 (revised 2003) as this is the first time MASB puts in place IAS 40 Investment Property for application in Malaysia. | ![]() | added |
Cost Model
83. | FRS 108 applies to any change in accounting policies that is made when an entity first applies this Standard and chooses to use the cost model. The effect of the change in accounting policies includes the reclassification of any amount held in revaluation surplus for investment property. |
84. | The requirements of paragraphs 27-29 regarding the initial measurement of an investment property acquired in an exchange of assets transaction shall be applied prospectively only to future transactions. |
Effective Date
85. | An entity shall apply this Standard for annual periods beginning on or after 1 January 2006. Earlier application is encouraged. If an entity applies this Standard for a period beginning before 1 January 2006, it shall disclose that fact. |
Withdrawal of Provisions of FRS 1252004
86. | This Standard supersedes IAS 40 Investment Property (issued in 2000). | ![]() | deleted | ||
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86A. | This Standard supersedes that part of FRS 1252004 Accounting for Investments that deals with investment property. | ![]() | added |
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