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CA Final · Financial Reporting · Ind AS 40 Investment Property

Sundaram Realty Ltd acquired a commercial building in Pune that it intends to hold only to earn rentals and for long-term capital appreciation. In its Ind AS financial statements, which measurement model is permitted for this property after initial recognition?

Ind AS 40 permits only the cost model for investment property after initial recognition. Unlike IAS 40, which allows a choice between cost and fair value, the Indian standard has deleted the fair value model paragraphs, so the entity must carry the property at cost less depreciation and impairment.

  1. AFair value model, with changes taken to profit or loss
  2. BCost model onlyCorrect
  3. CRevaluation model, with changes taken to other comprehensive income
  4. DEither cost or fair value model, at the entity's choice

Explanation

Ind AS 40 differs from IAS 40: it permits only the cost model for measurement after initial recognition. The fair value model paragraphs of IAS 40 have been deleted. Options offering fair value or a free choice describe IAS 40, not Ind AS 40.

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