Investment property is land or a building (including part of a building) or both that is:
Investment property may include investment property that is being redeveloped.
An investment property is measured initially at cost. The cost of an investment property interest held under a lease is measured in accordance with IAS 17 at the lower of the fair value of the property interest and the present value of the minimum lease payments.
For subsequent measurement an entity must adopt either the fair value model or the cost model as its accounting policy for all investment properties. All entities must determine fair value for measurement (if the entity uses the fair value model) or disclosure (if it uses the cost model). Fair value reflects market conditions at the end of the reporting period.
Under the fair value model, investment property is remeasured at the end of each reporting period. Changes in fair value are recognised in profit or loss as they occur. Fair value is the price at which the property could be exchanged between knowledgeable, willing parties in an arm’s length transaction, without deducting transaction costs (see IFRS 13).
Under the cost model, investment property is measured at cost less accumulated depreciation and any accumulated impairment losses. Fair value is disclosed.
Gains and losses on disposal are recognised in profit or loss.
In April 2001 the International Accounting Standards Board (Board) adopted IAS 40 Investment Property, which had originally been issued by the International Accounting Standards Committee in April 2000. That Standard had replaced some parts of IAS 25 Accounting for Investments, which had been issued in March 1986 and had not already been replaced by IAS 39 Financial Instruments: Recognition and Measurement.
In December 2003 the Board issued a revised IAS 40 as part of its initial agenda of technical projects.
In January 2016, IFRS 16 Leases made various amendments to IAS 40, including expanding its scope to include both owned investment property and investment property held by a lessee as a right-of-use asset.
In December 2016, the Board issued Transfers of Investment Property (Amendments to IAS 40) which clarifies when there is a transfer to, or from, investment property.
Other Standards have made minor consequential amendments to IAS 40. They include IFRS 13 Fair Value Measurement (issued May 2011), Annual Improvements to IFRSs 2011–2013 Cycle (issued December 2013), IFRS 15 Revenue from Contracts with Customers (issued May 2014), Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) (issued June 2014), IFRS 17 Insurance Contracts (issued May 2017) and Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018).