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.

When does an investment property need to be derecognised?

An in­vest­ment property should be dere­cog­nised on disposal or when the in­vest­ment property is per­ma­nently withdrawn from use and no future economic benefits are expected from its disposal.

When is a property classified as investment property?

If the entity provides ancillary services to the occupants of a property held by the entity, the ap­pro­pri­ate­ness of clas­si­fi­ca­tion as in­vest­ment property is de­ter­mined by the sig­nif­i­cance of the services provided.

How is investment property classified under IAS 40.6?

Property held under an operating lease. A property interest that is held by a lessee under an operating lease may be clas­si­fied and accounted for as in­vest­ment property provided that: [IAS 40.6] An entity may make the foregoing clas­si­fi­ca­tion on a prop­erty-by-prop­erty basis.

What are the rules for transferring investment property?

The following rules apply for accounting for transfers between cat­e­gories: for a transfer from in­vest­ment property carried at fair value to owner-oc­cu­pied property or in­ven­to­ries, the fair value at the change of use is the ‘cost’ of the property under its new clas­si­fi­ca­tion [IAS 40.60]

What happens to residual value of investment property?

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.

How is leverage used to buy real estate?

Unlike stock and bond investors, prospective real estate owners can use leverage to buy a property by paying a portion of the total cost up front, then paying off the balance, plus interest, over time.