IAS40: Accounting and Finance - Investment Property - Dissertation Assessment Answer

Subject Code:  IAS40

Dissertation Assessment Answer

Assignment Task: IAS40 INTRODUCTION   Investment activity is one of the most important indicators of the economic development of any state and country. Besides, it determines a country’s participation in the global economy.  For the purposes of gaining a profit, the companies often invest their free monetary resources in the immovable property. Classification as the investment property of a property held by its owner is determined by a condition, of how and for which purpose this property will be used in future and, correspondingly, by which ways the money flows will be generated from such the property. In general, the investment property is a long-term investment, which is related to the very low risks. Its value is increased continuously and deriving a benefit from it, is possible both by its sale in a short period and on the grounds of a long-term lease which is one of the attractive methods for diversification of an investor’s portfolio and gaining a non-risk revenue. One more important factor that characterizes the investment property is that it compensates its value after a certain period and, remains under the ownership of its holder.  Background on IASB The IASB (International Accounting Standards Board) is an independent and privately-financed organization who issues International Financial Reporting Standards (IFRS) previously names International Accounting Standards (IAS). (IASB, 2007).  To visualise the intentions of standards, the IASB has created a Framework for the Preparation and Presentation of Financial Statements where general principles and purposes can be found (IASB’s Framework). (Susana Callao, 2009), with the implementation of the IFRS/IAS, Swedish accounting is turning towards the Anglo-Saxon accounting tradition.  Due to this implementation, regulators’ demands for true and fair values of Companies. A brief overview of IAS40 Defined terms The owner or leaseholder underneath a finance lease to earn rentals, or for capital appreciation, or both. An investment property should generate cash flows that are largely independent of the other assets held by the entity. (Van Greuning, Hennie, 2006) (IASPlus, n.d.)

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