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IAS 40 permits entities to choose either a fair value model or cost model when accounting for investment properties.
The chosen model must be applied to all investment properties held by an entity.
Under the fair value model, investment properties are measured at fair value, with any changes recognised in profit or loss.
Under the cost model, properties are measured at depreciated cost (although fair value must also be disclosed).
All amendments issued up to and including the publication date of 1 January 2022 are included within the IFRS Foundation’s latest version of the issued standard: 2022 Issued Standard – IAS 40. Issued amendments may, therefore, have a mandatory effective date that is later than 1 January 2022 – see below for details.
Any amendments issued after 1 January 2022 will not be included in the IFRS Foundation’s 2022 Issued Standards but will be listed below and identified as such.
See the Corporate Reporting Faculty’s annual IFRS factsheets for a more detailed discussion of recent IFRS amendments.
IFRS 17 Insurance Contracts amendment to IAS 40
Mandatory date: Annual periods beginning on or after 1 January 2023. Earlier application is permitted.
IAS 40 is amended to reflect IFRS 17 rather than IFRS 4 in the context of applying IAS 40 measurement models to properties held by investment funds and properties that are underlying items in insurance contracts with direct participation features.
UK reduced disclosures – FRS 101
UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Our FRS 101 page gives more information on which entities qualify and the criteria to be met.
Amendments to the standard for FRS 101 preparers
No amendments are required to IAS 40 in order to achieve compliance with the Companies Act and related Regulations.
Disclosure exemptions for FRS 101 preparers
FRS 101 paragraph 8(f) states that a qualifying entity is exempt from the requirement to provide a reconciliation between the carrying amounts of investment property at the beginning and end of the comparative period. This exemption is applicable whether investment property is carried under the cost or fair value model.
IAS 40 paragraphs for which exemption is available: 76 and 79(d) (comparative periods only).
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