Fair value model for PPE
28 August 2008
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The company should have used the (IAS 16) from the beginning, as this is illiquid investment.
Any way it is possible to apply the cost principle instead of the value, but there should be a reversal of the previouse capital earnnings recognized under ( IAS 40).
In addition a footnote disclosure stating all the effects and details of the principle changes.
Regards
A.A . Rahman
Dear All,
Please guide me on the below
A Company is having land on which construction is going on. The intention of the company is to let it out for the rental income. Now in previous year the same land is shown under Investment property (IAS 40) and the fair value model was applied for the revaluation and the increase in valu was routed through profit & loss.
Now in current year, the Company intends to treat this land as PPE (IAS 16) (the construction work is still going on) and apply the cost model. So now advice me on the below
Can we show the land under PPE (IAS 16) from Investment property (IAS 40 – shown in previous year)
can we apply cost model V/s fair value model (applied previous year)
Please advice at the earliest.
Best Regards
Suraj
Suraj
Dear suraj ratan,
you will account for the land in PPE and will use cost model from the date of the decision of the managment to consider the land for own use (production of goods, rendering services or for mgt purposes).
rgrds,
Ammad
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