Skip to content

CA Final · Financial Reporting · Ind AS 40 Investment Property

Kapoor Developers holds a commercial building purely to earn rentals, under an operating lease to an unrelated tenant. Separately, it holds another building leased to a tenant under a finance lease, and a third plot acquired exclusively for development and resale in the near future. Which of these properties is investment property under Ind AS 40?

Only the building leased out under the operating lease is investment property. Property leased to another entity under a finance lease is outside Ind AS 40, and property acquired for development and resale in the ordinary course is inventory under Ind AS 2.

  1. AOnly the building let under the operating leaseCorrect
  2. BThe building let under the operating lease and the building under the finance lease
  3. CThe building under the operating lease and the plot held for development and resale
  4. DAll three properties

Explanation

Property leased under a finance lease is excluded from Ind AS 40, and property acquired exclusively for development and resale is inventory under Ind AS 2. Only the building held to earn rentals under an operating lease qualifies as investment property.

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