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CA Final · Financial Reporting · Ind AS 40 Investment Property

Sunrise Realty Ltd, an Ind AS reporting company, owns an office building. A reporting analyst asks which measurement model Ind AS 40 permits for investment property after initial recognition, compared with IAS 40. Which statement is correct?

Ind AS 40 allows only the cost model for measuring investment property after initial recognition. IAS 40 permits both the cost and fair value models, but the fair value model paragraphs were deleted in the Indian standard, so Indian companies cannot use fair value for subsequent measurement.

  1. AInd AS 40 permits only the cost model, whereas IAS 40 permits both the cost model and the fair value modelCorrect
  2. BInd AS 40 permits only the fair value model, whereas IAS 40 permits only the cost model
  3. CInd AS 40 permits both cost and fair value models, as IAS 40 does
  4. DInd AS 40 permits the cost model for buildings and the fair value model for land

Explanation

The comparison with IAS 40 states that IAS 40 allows both the cost model and fair value model, while Ind AS 40 permits only the cost model. The paragraphs dealing with the fair value model were deleted in Ind AS 40. The fair value only option is therefore wrong.

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