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CA Final · Financial Reporting · Ind AS 36 Impairment of Assets

Sagar Textiles Ltd. prepares its financial statements under Ind AS and also holds an investment property that it measures after recognition. A finance trainee asks whether Ind AS 36 contains a provision dealing with investment property carried at fair value, as IAS 36 does. Which statement is correct as per the Ind AS 36 comparison with IAS 36?

Paragraph 2(f) of Ind AS 36 is deleted because Ind AS 40 requires the cost model for investment property. The number is kept only for consistency with IAS 36, and paragraph 5 was modified to drop the fair value reference. So no fair value carve-out exists in Ind AS.

  1. AParagraph 2(f) is deleted in Ind AS 36 because Ind AS 40 requires the cost model, so the fair value model for investment property is not availableCorrect
  2. BParagraph 2(f) is retained in full because Ind AS 40 permits both cost and fair value models
  3. CParagraph 2(f) is deleted because investment property is fully exempt from impairment testing under Ind AS
  4. DParagraph 2(f) is retained but applies only to investment property held by subsidiaries

Explanation

The comparison with IAS 36 states paragraph 2(f) is deleted because Ind AS 40 requires the cost model. Paragraph 5 was modified to remove the reference to fair value measurement of investment property. Investment property under the cost model remains subject to impairment testing, so the exemption option is wrong.

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