Skip to content

CMA Intermediate · Financial Accounting · Property, Plant and Equipment (AS 10)

According to AS 10, how should investment property, as defined in AS 13, Accounting for Investments, be accounted for as stated in the standard text provided?

Investment property as defined in AS 13 is to be accounted for only in accordance with the cost model prescribed in AS 10. No fair value through profit or loss, and no choice of revaluation model, is permitted for it under the quoted text.

  1. AOnly in accordance with the cost model prescribed in AS 10Correct
  2. BAt fair value with changes taken to the Statement of Profit and Loss
  3. CUnder either the cost model or the revaluation model, at the choice of the enterprise
  4. DAs inventory at lower of cost and net realisable value

Explanation

The text states that investment property as defined in AS 13 should be accounted for only in accordance with the cost model prescribed in the standard. Fair value through profit and loss and a free choice of models are therefore not permitted. Inventory treatment applies to items held for sale, not investment property.

Did you get it right without looking?

One question tells you little. A timed set on Property, Plant and Equipment (AS 10) shows your real accuracy, how long you take and where you lose marks.

Practise Property, Plant and Equipment (AS 10)Free diagnostic mock

More Property, Plant and Equipment (AS 10) questions