IAS 40 investment property : practical implications within the local business environment

Abstract

Investment property has several different characteristics from owner-occupied property which have to be distinguished for financial reporting purposes. IAS 40 Investment Property is the newly issued standard by the International Accounting Standards Board (IASB) that regulates the treatment of investment property in the financial statements. This study gives a clear picture of the method most commonly used by local enterprises to measure investment property in the financial statements prior to the introduction of IAS 40, and the proposed model to be chosen under the new requirements of the standard. Analysis and explanations are also made of the major implications and effects that the use of fair values for such measurement has on local enterprises. All this is carried out through interviews conducted with those responsible for the preparation and presentation of financial statements of the selected enterprises, with auditors and architects. The dissertation is concluded by presenting recommendations emerging from the study, possible problems and future prospects of a fair value accounting model being fully implemented by local enterprises.