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CA Final · Financial Reporting · Ind AS 40 Investment Property

Ind AS 40 differs from IAS 40 in its choice of measurement after initial recognition. Which statement correctly describes the position under Ind AS 40 for an investment property held by Veda Realty Ltd?

Ind AS 40 permits only the cost model for measuring investment property after initial recognition. The fair value model available under IAS 40 has been deleted, so an Indian entity cannot choose it as an accounting policy, whether the property is held for rentals or capital appreciation.

  1. AOnly the cost model is permitted; the fair value model of IAS 40 has been removedCorrect
  2. BEntity may choose either the cost model or the fair value model as an accounting policy
  3. CFair value model is mandatory for properties held for capital appreciation
  4. DFair value model is permitted only for properties leased out under operating leases

Explanation

The comparison with IAS 40 states that IAS 40 permits both models but Ind AS 40 permits only the cost model, and the fair value paragraphs were deleted. The option allowing a choice describes IAS 40, not Ind AS 40. Mandatory or restricted fair value options have no basis in the Standard.

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