Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

Investment Property

Ind AS - 040 - B. Indian Accounting Standards (Ind AS) - Companies Law - Ind AS - 040 - Indian Accounting Standard (Ind AS) 40 (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles.) Objective 1 The objective of this Standard is to prescribe the accounting treatment for and related disclosure requirements. Scope 2 This Standard shall be applied in the recognition, measurement and disc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e); ] (c) measurement in a lessee s financial statements of property interests held under a lease accounted for as an operating lease; (d) measurement in a lessor s financial statements of its net investment in a finance lease; (e) accounting for sale and leaseback transactions; and (f) disclosure about finance leases and operating leases. 4 This Standard does not apply to: (a) biological assets related to agricultural activity (see Ind AS 41, Agriculture and Ind AS 16 Property, Plant and Equipm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that asset when initially recognised in accordance with the specific requirements of other Ind ASs, eg Ind AS 102, Share based Payment. Fair value 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. (See Ind AS 113, Fair Value Measurement). is property (land or a building-or part of a building-or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r both. Therefore, an generates cash flows largely independently of the other assets held by an entity. This distinguishes from owner-occupied property. The production or supply of goods or services (or the use of property for administrative purposes) generates cash flows that are attributable not only to property, but also to other assets used in the production or supply process. Ind AS 16 applies to owner-occupied property. 8 The following are examples of : (a) land held for long-term capital .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ut is held to be leased out under one or more operating leases. (e) property that is being constructed or developed for future use as . 9 The following are examples of items that are not and are therefore outside the scope of this Standard: (a) property intended for sale in the ordinary course of business or in the process of construction or development for such sale (see Ind AS 2, Inventories), for example, property acquired exclusively with a view to subsequent disposal in the near future or f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fer Appendix 1] (e) property that is leased to another entity under a finance lease. 10 Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), an entity accounts for the portions separately. If the portions could not be sold separately, the propert .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rovided are significant. For example, if an entity owns and manages a hotel, services provided to guests are significant to the arrangement as a whole. Therefore, an owner-managed hotel is owner-occupied property, rather than . 13 It may be difficult to determine whether ancillary services are so significant that a property does not qualify as . For example, the owner of a hotel sometimes transfers some responsibilities to third parties under a management contract. The terms of such contracts va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd with the related guidance in paragraphs 7-13. Paragraph 75(c) requires an entity to disclose these criteria when classification is difficult. 14A Judgement is also needed to determine whether the acquisition of is the acquisition of an asset or a group of assets or a business combination within the scope of Ind AS 103, Business Combinations. Reference should be made to Ind AS 103 to determine whether it is a business combination. The discussion in paragraphs 7-14 of this Standard relates to w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

roperty does not qualify as in the consolidated financial statements, because the property is owner-occupied from the perspective of the group. However, from the perspective of the entity that owns it, the property is if it meets the definition in paragraph 5. Therefore, the lessor treats the property as in its individual financial statements. Recognition 16 shall be recognised as an asset when, and only when: (a) it is probable that the future economic benefits that are associated with the will .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s are recognised in profit or loss as incurred. Costs of day-today servicing are primarily the cost of labour and consumables, and may include the cost of minor parts. The purpose of these expenditures is often described as for the repairs and maintenance of the property. 19 Parts of investment properties may have been acquired through replacement. For example, the interior walls may be replacements of original walls. Under the recognition principle, an entity recognises in the carrying amount o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ttributable expenditure includes, for example, professional fees for legal services, property transfer taxes and other transaction costs. 22 [Refer Appendix 1] 23 The cost of an is not increased by: (a) start-up costs (unless they are necessary to bring the property to the condition necessary for it to be capable of operating in the manner intended by management), (b) operating losses incurred before the achieves the planned level of occupancy, or (c) abnormal amounts of wasted material, labour .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and the present value of the minimum lease payments. An equivalent amount shall be recognised as a liability in accordance with that same paragraph. 26 Any premium paid for a lease is treated as part of the minimum lease payments for this purpose, and is therefore included in the cost of the asset, but is excluded from the liability. If a property interest held under a lease is classified as , the item accounted for at fair value is that interest and not the underlying property. Guidance on meas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s described in the preceding sentence. The cost of such an is measured at fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. The acquired asset is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired asset is not measured at fair value, its cost is measured at the carrying amount of the asset given up. 28 An entity determin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s a result of the exchange, and (c) the difference in (a) or (b) is significant relative to the fair value of the assets exchanged. For the purpose of determining whether an exchange transaction has commercial substance, the entity-specific value of the portion of the entity s operations affected by the transaction shall reflect post-tax cash flows. The result of these analyses may be clear without an entity having to perform detailed calculations. 29 The fair value of an asset is reliably measu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

after recognition Accounting policy 30 An entity shall adopt as its accounting policy the cost model prescribed in paragraph 56 to all of its . 31 [Refer Appendix 1] 32 This Standard requires all entities to measure the fair value of , for the purpose of disclosure even though they are required to follow the cost model. An entity is encouraged, but not required, to measure the fair value of on the basis of a valuation by an independent valuer who holds a recognised and relevant professional qual .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pendix 1] 48 In exceptional cases, there is clear evidence when an entity first acquires an (or when an existing property first becomes after a change in use) that the variability in the range of reasonable fair value measurements will be so great, and the probabilities of the various outcomes so difficult to assess, that the usefulness of a single measure of fair value is negated. This may indicate that the fair value of the property will not be reliably measurable on a continuing basis (see pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inactive (eg there are few recent transactions, price quotations are not current or observed transaction prices indicate that the seller was forced to sell) and alternative reliable measurements of fair value (for example, based on discounted cash flow projections) are not available. If an entity determines that the fair value of an under construction is not reliably measurable but expects the fair value of the property to be reliably measurable when construction is complete, it shall measure t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shall measure the fair value of that property. Once construction of that property is complete, it is presumed that fair value can be measured reliably. If this is not the case, in accordance with paragraph 53, the entity shall make the disclosures required by paragraphs 79(e)(i), (ii) and (iii). 53B The presumption that the fair value of under construction can be measured reliably can be rebutted only on initial recognition. An entity that has measured the fair value of an item of under constru .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fair value of each of the remaining properties for disclosure required by paragraph 79(e). 55 If an entity has previously measured the fair value of an , it shall continue to measure the fair value of that property until disposal (or until the property becomes owner-occupied property or the entity begins to develop the property for subsequent sale in the ordinary course of business) even if comparable market transactions become less frequent or market prices become less readily available. Cost .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sal group that is classified as held for sale) shall be measured in accordance with Ind AS 105. Transfers 57 Transfers to, or from, shall be made when, and only when, there is a change in use, evidenced by: (a) commencement of owner-occupation, for a transfer from to owner-occupied property; (b) commencement of development with a view to sale, for a transfer from to inventories; (c) end of owner-occupation, for a transfer from owner-occupied property to ; or (d) commencement of an operating leas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to redevelop an existing for continued future use as , the property remains an and is not reclassified as owner-occupied property during the redevelopment. 59 Transfers between , owner-occupied property and inventories do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purposes. 60-65 [Refer Appendix 1] Disposals 66 An shall be derecognised (eliminated from the balance sheet) on disposal or when the is perm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nises in the carrying amount of an asset the cost of a replacement for part of an , it derecognises the carrying amount of the replaced part. A replaced part may not be a part that was depreciated separately. If it is not practicable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement as an indication of what the cost of the replaced part was at the time it was acquired or constructed. 69 Gains or losses arising from the retirement or dispo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

etween the nominal amount of the consideration and the cash price equivalent is recognised as interest revenue in accordance with Ind AS 18 using the effective interest method. ] 71 An entity applies Ind AS 37 or other Standards, as appropriate, to any liabilities that it retains after disposal of an . 72 Compensation from third parties for that was impaired, lost or given up shall be recognised in profit or loss when the compensation becomes receivable. 73 Impairments or losses of , related cla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(d) the cost of assets restored, purchased or constructed as replacements is determined in accordance with paragraphs 20-29 of this Standard. Disclosure 74 The disclosures below apply in addition to those in Ind AS 17. In accordance with Ind AS 17, the owner of an provides lessors disclosures about leases into which it has entered. An entity that holds an under a finance lease provides lessees disclosures for finance leases and lessors disclosures for any operating leases into which it has enter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ofessional qualification and has recent experience in the location and category of the being valued. If there has been no such valuation, that fact shall be disclosed. (f) the amounts recognised in profit or loss for: (i) rental income from ; (ii) direct operating expenses (including repairs and maintenance) arising from that generated rental income during the period; and (iii) direct operating expenses (including repairs and maintenance) arising from that did not generate rental income during t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period; (d) a reconciliation of the carrying amount of at the beginning and end of the period, showing the following: (i) additions, disclosing separately those additions resulting from acquisitions and those resulting from subsequent expenditure recognised as an asset; (ii) additions resulting from acquisitions through business combinations; (iii) assets classified as held for sale or inc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ransfers to and from inventories and owner-occupied property; and (viii) other changes. (e) the fair value of . In the exceptional cases described in paragraph 53, when an entity cannot measure the fair value of the reliably, it shall disclose: (i) a description of the ; (ii) an explanation of why fair value cannot be measured reliably; and (iii) if possible, the range of estimates within which fair value is highly likely to lie. Appendix 1 Note: This Appendix is not a part of the Indian Account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

phs of IAS 40 which deal with fair value model have been deleted in Ind AS 40. In order to maintain consistency with paragraph numbers of IAS 40, the paragraph numbers are retained in Ind AS 40: (i) Paragraph 6 (ii) Paragraph 31 (iii) Paragraphs 32A-32C (iv) Paragraphs 33-35 (v) Paragraph 41 (vi) Paragraph 50 (vii) Paragraph 52 (viii) Paragraphs 60-65 (ix) Paragraph 75(b) (x) Paragraph 75(f)(iv) (xi) Paragraphs 76-78 2 The transitional provisions given in IAS 40 have not been included in Ind AS .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

include deletion of reference to use of cost model when fair value measurement is unreliable. 4 IAS 40 permits treatment of property interest held in an operating lease as , if the definition of is otherwise met and fair value model is applied. In such cases, the operating lease would be accounted as if it were a finance lease. Since Ind AS 40 prohibits the use of fair value model, this treatment is prohibited in Ind AS 40. As a result, paragraph 6 of IAS 40 has been deleted in Ind AS 40 (see p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

raph 59 (deletion of portion relating to fair value model), paragraph 68 (deletion of a portion dealing with fair value model), heading above paragraph 74 (deletion of the heading Fair value model and cost model ), 75(a) (disclosure of accounting policy) as compared to the wording used in IAS 40, heading above paragraph 76 (deletion of the heading Fair value model ), heading above paragraph 79 (deletion of the heading Cost model ) and paragraph 79 (deletion of the words that applies the cost mod .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version