Basic Idea:

If you are going to not invest your money into buying shares but instead investing your money into some land and buildings to earn capital gain(non-cash item) or let it out to earn rental income(cash item), well this is investment property.

Classification of investment property:

Investment purpose (earns capital gain or let it out to earn rental income and if not:

Use by company: IAS 16; held for sale: IAS2)

Complete(asset has been completed and if not, IAS 16 until it’s finished)


And they should be recognized at cost initially.


Subsequent measurement:

  1. Fair value model (widely used)

    Get the fair value:

    • From Price
    • From Similar asset within the area
    • From Value from institution for similar assets
    • From Discount future cash flow


    Then any gain/losses should be recognized into the Income statement.

    Gain: DR Investment property(NCA)

    CR I/S

    Loss: DR I/S

    CR investment property(NCA)

    If the fair value cannot be obtained by the company then it can use cost model(IAS16)


  2. Cost Model (Rarely used)

    Recognized the investment property at cost and depreciate over its useful economic life.



    Fair value model

    An entity that adopts this must also disclose a reconciliation of the carrying amount of the investment property at the beginning and end of the period.


    Opening IP value 100


    Closing IP value150

    Cost model

    These relate mainly to the depreciation method. In addition, an entity which adopts the cost model must disclose the fair value of the investment property.