Corporate Professional Today – October 20, 2018

412 October 20 To October 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 43 u^54

Accounts & AuditAccounts & Audit

Statutory Changes

    AS: Exposure    draft       on  Investment  

Property    issued; slightly    diff    ers from    

Ind AS

With an overall objective to bring AS (Ac-
counting Standards) on par with Ind AS
(Indian Accounting Standards) an Exposure
Draft on new Accounting Standards (AS)
40, Investment Property has been issued.
The Standard deals with the recognition
and measurement of investment property.
Currently, AS 13, Accounting for Investments
provides limited guidance on accounting and
financial reporting of investment properties.
It has been drafted on the basis of Ind AS
40 with the same name.

Following are the key principles of Proposed
AS 40 for recognition and measurement of
an investment property:

(i) To check whether a property shall be
considered as investment property
or PPE, the intention of holding the
property by an entity is considered,
irrespective of whether the property
is actually used or not to earn rentals
or capital appreciation.

(ii) An investment property shall be rec-
ognised only when it is probable that
the future economic benefits associated

with it will flow to the entity and its

cost can be measured reliably.

(iii) Initially, it should be measured at cost,

including transaction costs, if any. How-

ever, lessor of an investment property

leased under finance lease shall measure

it in accordance with lease standard,

i.e., lower of fair value of investment

property and present value of minimum

lease payments.

(iv) Subsequently, an investment property

shall be measured at cost less accu-

mulated depreciation and impairment

losses, if any. Such property should

also be tested for impairment. But, if

the investment property meets the cri-

teria to be classified held for sale then

such property should be measured in

accordance with the relevant standard

on non-current assets held for sale and

discontinued operations.

(v) When an entity transfers a property to or

from investment property (e.g., transfer

from inventories or PPE to investment

property) the carrying amount and the

cost of the property for measurement

and disclosures purposes do not change.

User can provide their comments on the draft

till November 10, 2018.

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