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

Sunrise Textiles Ltd prepares its financial statements under Ind AS and holds an investment property that it accounts for using the cost model. The finance head asks whether the fair value model for investment property could ever be combined with an impairment test under Ind AS 36. According to the comparison of Ind AS 36 with IAS 36, why is the IAS 36 scope exclusion for investment property measured at fair value (paragraph 2(f)) deleted in Ind AS 36?

Paragraph 2(f) of IAS 36, which excluded investment property measured at fair value, is deleted in Ind AS 36 because Ind AS 40 requires the cost model. Investment property is therefore never carried at fair value in India, so no such scope exclusion is needed, and the paragraph number is merely retained.

  1. ABecause Ind AS 40 requires the cost model for investment propertyCorrect
  2. BBecause Ind AS 40 requires investment property to be measured at fair value
  3. CBecause Ind AS 113 prohibits fair value for investment property
  4. DBecause investment property is excluded from all Indian accounting standards

Explanation

The comparison with IAS 36 states that paragraph 2(f) is deleted because Ind AS 40 requires the cost model. The paragraph number is retained for consistency with IAS 36. Since investment property is carried at cost, it is not excluded and Ind AS 36 impairment testing applies. The fair value option is wrong because Ind AS 40 does not permit it.

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