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CA Final · Financial Reporting · Ind AS 40 Investment Property

Sundaram Realty Ltd, an Ind AS reporting company, owns an office building. It is considering how to measure its investment properties after initial recognition. Which of the following statements is correct under Ind AS 40 as notified in India?

Ind AS 40 permits only the cost model for measuring investment property after initial recognition. Unlike IAS 40, which allows a choice between cost and fair value models, the fair value model paragraphs have been deleted in the Indian standard, so entities cannot adopt fair value through profit or loss.

  1. AEntity may choose between the cost model and the fair value model as an accounting policy
  2. BOnly the cost model is permitted for subsequent measurement of investment propertyCorrect
  3. COnly the fair value model is permitted, with changes in fair value taken to profit or loss
  4. DFair value model is permitted only for property leased to related parties

Explanation

Ind AS 40 differs from IAS 40 in that it permits only the cost model for measurement after initial recognition. The fair value model paragraphs of IAS 40 have been deleted. The option allowing a choice reflects IAS 40, not Ind AS 40.

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