Accounting for Depreciation on Investment Properties IAS 40 Measurement Models Investment properties are initially measured at cost, which includes purchase price and directly attributable costs (legal fees, transfer taxes). Under IAS 40, entities choose one consistent subsequent measurement model for all investment properties: Fair value model Cost model Cost Model Under the cost model, an investment property is carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is recognized in profit or loss on a systematic basis over the property’s useful life. Key steps include: Estimate the asset’s useful life and residual value Allocate the depreciable amount (cost less residual value) over that useful life Review at each reporting date for indicators of impairment and adjust if necessary (IAS 36) Fair Value Model When using the fair value model, entities do not depreciate the property. Instead, they: Remeasure the property t...
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