Investment Property

1. Which is considered an investment property?

• Building held for lease under an operating lease

• Building under construction

• Building held for sale in the normal course of business

• Building used in business

An investment property shall be initially measure at

• At cost

• Cost less accumulated impairment losses

• Depreciable cost less accumulated impairment losses

• Fair value less accumulated impairment losses

An entity has investment property that is held to earn rental income. The entity uses fair value model for reporting the investment property. Which statement is true?

• Changes in fair value are recognized in profit or loss of the current period.

• Changes in fair value are reported as an extra ordinary gain in the period

• Changes in fair value are reported as component of other comprehensive income for the period

• Changes in fair value are reported as deferred revenue for the period

An entity has investment property and uses fair value model. Which of the following statements is true?

• The entity should measure the investment property at cost less accumulated depreciation and less accumulated impairment losses

• The entity should report the increase in fair value in other comprehensive income for the period

• The entity should depreciate the investment property using normal depreciation policy

• The entity does not record depreciation on the investment

An entity purchased land for future use and appropriately classified the land as investment property. What measurement model may be used to report the land?

• Fair value model or revaluation model

• Revaluation model

• Cost model or fair value model

• Cost model or revaluation model

In case the property held under an operating lease and classified as investment property

• The entity has to use the cost model only

• The entity has to use fair value model only

• The entity has the choice between the cost model and the fair value model

• The entity needs only to disclose the fair value and can use the cost model

Transfer from investment property to property, plant and equipment is appropriate

• When there is a change of use

• Based on the entity’s discretion

• Only when the entity adopts the fair value model

• The entity can never transfer property into another classification one it is classified as investment

Which of the following statements regarding investment property is correct?

• If the entity elects the fair value model, no depreciation is taken

• Gain or loss from fair value adjustments is reported in the income statement

• If the entity elects the cost model, depreciation should be recognized

• All of these statements are correct regarding the investment property

An investment property is derecognized when

• It is disposed to a third party

• It is permanently withdrawn from use

• No future economic benefits are expected from the disposal

• All of the above cases

Which of the following additional disclosures must be made when an entity chooses the cost model as the accounting policy for investment property?

• The fair value of the property

• The present value of the property

• The value in use of the property

• The net realizable value of the property