Page 37 - FINAL CFA I SLIDES JUNE 2019 DAY 8
P. 37
Session Unit 8:
LOS 29.n: Compare the financial reporting of investment property 29. Long-lived Assets
with that of property, plant, and equipment. p.230
Investment property (IP) Property , Plant and Equipment (PPE)
(Owned for purpose of rental income and earning capital (owned for use in operation/production/administration)
appreciation)
IFRS • Allows cost model or fair value model (if FV • Allows cost model or fair value model (if FV can
can be reliably established) but once adopted, must be reliably established) but once adopted, must be
be consistently applied across all properties). consistently applied across all properties).
tanties
• Cost model for IP same for PPE but FV is different as • Cost model for PPE same for IP but FV is different as any
any revaluation above historical cost is recognised as revaluation above historical cost is recognised as
a gain in Income Statement. revaluation surplus in owners equity.
• Full disclosure of which valuation method was used is • Full disclosure of which valuation method was used is
required and if FV was used, notes must state how FV required and if FV was used, notes must state how FV
was determined and reconcile it to beginning and was determined and reconcile it to beginning and
ending values. ending values.
• Firms that use cost model, must disclose FV, along • Firms that use cost model, must disclose FV, along
with the disclosures required for other types of long- with the disclosures required for other types of long-
lived assets (e.g. useful lives, depreciation methods, lived assets (e.g. useful lives, depreciation methods,
used, etc.) used, etc.)
US GAAP • Does not distinguish between investment Does not distinguish between investment
property from PPE or other types of long- property from PPE or other types of long-lived
lived assets. assets.
