Investment Property Recognition Quiz

What criteria must an entity disclose regarding investment property?

• The market value of the property.

• The criteria it uses to distinguish investment property from owner-occupied property.

• The historical cost of the property.

• The expected future cash flows from the property.

State whether or not the above respective assets would be recognised as Investment Property according to MFRS 140 Investment Property.

An investment fund company located in Teluk Intan acquires a portfolio of residential apartment complexes with the primary objective of generating rental income from tenants.

• Not an Investment property

• Investment property

What specific information must be disclosed if the fair value model is applied to investment property?

• Depreciation method and useful lives.

• Reconciliation of carrying amount at the beginning and end of the period.

• Gross carrying amount and accumulated depreciation.

• Criteria used to distinguish investment property from owner-occupied property.

State whether or not the above respective assets would be recognised as Investment Property according to MFRS 140 Investment Property.

An old building which was once used as hostel for the employees but recently has been renovated and currently rented out to Hybee Bhd.

• Not an Investment property

• Investment property

MFRS 140 applies to all types of assets, including land, property, and other assets.

• True

• False

An entity shall transfer an investment property to inventories upon commencement of development with a view to sale.

• True

• False

What details must be disclosed if the cost model is applied to investment property?

• Methods and assumptions used to determine fair value.

• Rental income and operating expenses.

• Depreciation method, useful lives, gross carrying amount, and accumulated depreciation at the beginning and end of the period.

• Changes in fair value.

When the fair value of an investment property is not reliably determinable on a continuing basis, what assumption is made about the residual value, and which model is applied until its disposal?

• Residual value is assumed to be the market value; fair value model is applied.

• Residual value is assumed zero; cost model in MFRS 116 is applied.

• Residual value is assumed to be the book value; revaluation model is applied.

• Residual value is assumed to be the replacement cost; cost model in MFRS 116 is applied.

When using the fair value model for an investment property, changes in the fair value should be recognized in the statement of financial position.

• True

• False

Answer explanation

When using the fair value model for an investment property, changes in the fair value are recognized in the profit or loss statement, not in the statement of financial position

If the fair value of an investment property under construction is not reliably determinable, which model should be used until either its fair value is reliably determinable or construction is completed?

• Fair value model

• Cost model

• Revaluation model

• Depreciation model