Skip to content

CA Final · Financial Reporting · Ind AS 40 Investment Property

Aarav Pharma Ltd owns a building in Hyderabad. It uses the ground floor as its administrative office and holds the first floor for future expansion of its own operations. The second floor is occupied by employees who pay rent at market rates. Which parts are NOT investment property under Ind AS 40?

None of the three floors is investment property. Administrative use makes the ground floor owner-occupied, property held for future owner use is owner-occupied, and property occupied by employees is owner-occupied whether or not they pay market rent.

  1. AOnly the ground floor
  2. BGround floor, and the first floor, but second floor is investment property since market rent is charged
  3. CAll three floors, as property held for future owner use and property occupied by employees (whether or not market rent is paid) is owner-occupiedCorrect
  4. DOnly the second floor

Explanation

Owner-occupied property includes property held for future use as owner-occupied property and property occupied by employees whether or not they pay market rent. The ground floor is used for administration, the first floor is held for future own use and the second floor is employee-occupied. Hence none is investment property; option 2 wrongly relies on market rent.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 40 Investment Property shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 40 Investment PropertyFree diagnostic mock

More Ind AS 40 Investment Property questions