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Commission Regulation (EC) No
2238/2004 of 29 December 2004 amending Regulation (EC) No 1725/2003
adopting certain international accounting standards in accordance
with Regulation (EC) No 1606/2002 of the European Parliament and of
the Council, as regards IASs IFRS 1, IASs Nos 1 to 10, 12 to 17, 19
to 24, 27 to 38, 40 and 41 and SIC Nos 1 to 7, 11 to 14, 18 to 27
and 30 to 33
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Transfers
57. Transfers to, or
from, investment property shall be made when, and only
when, there is a change in use, evidenced by:
(a) commencement of
owner-occupation, for a transfer from investment
property to owner-occupied property;
(b) commencement of
development with a view to sale, for a transfer
from investment property to inventories;
(c) end of
owner-occupation, for a transfer from owner-occupied
property
to investment property;
(d) commencement of
an operating lease to another party, for a transfer
from inventories to investment property; or
(e) end of
construction or development, for a transfer from
property
in the course of construction or development (covered
by IAS 16) to investment property.
58. Paragraph 57(b)
requires an entity to transfer a property from investment
property to inventories when, and only when, there is a change
in use, evidenced by commencement of development with a view
to sale. When an entity decides to dispose of an investment
property without development, it continues to treat the
property as an investment property until it is derecognised
(eliminated from the balance sheet) and does not treat it as
inventory. Similarly, if an entity begins to redevelop an
existing investment property for continued future use as
investment property, the property remains an investment
property and is not reclassified as owner-occupied property
during the redevelopment.
59. Paragraphs 60-65
apply to recognition and measurement issues that arise when an
entity uses the fair value model for investment property. When
an entity uses the cost model, transfers between investment
property, owner-occupied property and inventories do not
change the carrying amount of the property transferred and
they do not change the cost of that property for measurement
or disclosure purposes.
60. For a transfer
from investment property carried at fair value to owner-occupied
property or inventories, the property’s deemed cost for
subsequent accounting in accordance with IAS 16 or IAS 2 shall
be its fair value at the date of change in use.
61. If an
owner-occupied property becomes an investment property that
will be carried at fair value, an entity shall apply IAS
16 up to the date of change in use. The entity
shall treat any difference at that date between
the carrying amount of the property in accordance with
IAS 16 and its fair value in the same way as a revaluation in
accordance with IAS 16.
62. Up to the date
when an owner-occupied property becomes an investment property
carried at fair value, an entity depreciates the property and
recognises any impairment losses that have occurred. The
entity treats any difference at that date between the carrying
amount of the property in accordance with IAS 16 and its fair
value in the same way as a revaluation in accordance with IAS
16. In other words:
(a) any resulting
decrease in the carrying amount of the property is recognised
in profit or loss. However, to the extent that an amount is
included in revaluation surplus for that property, the
decrease is charged against that revaluation surplus.
(b) any resulting
increase in the carrying amount is treated as follows:
(i) to the extent
that the increase reverses a previous impairment loss for
that property, the increase is recognised in profit or loss.
The amount recognised in profit or loss does not exceed the
amount needed to restore the carrying amount to the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognised.
(ii) any remaining
part of the increase is credited directly to equity in
revaluation surplus. On subsequent disposal of the
investment property, the revaluation surplus included in
equity may be transferred to retained earnings. The transfer
from revaluation surplus to retained earnings is not made
through profit or loss.
63. For a transfer
from inventories to investment property that will be carried
at fair value, any difference between the fair value of the
property at that date and its previous carrying amount
shall be recognised in profit or loss.
64. The treatment of
transfers from inventories to investment property that will be
carried at fair value is consistent with the treatment of
sales of inventories.
65. When an entity
completes the construction or development of a self-constructed
investment property that will be carried at fair value,
any difference between the fair value of the property at that
date and its previous carrying amount shall be
recognised in profit or loss.
Disposals
66. An investment
property shall be derecognised (eliminated from the balance
sheet) on disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are
expected from its disposal.
67. The disposal of
an investment property may be achieved by sale or by entering
into a finance lease. In determining the date of disposal for
investment property, an entity applies the criteria in IAS 18
for recognising revenue from the sale of goods and considers
the related guidance in the Appendix to IAS 18. IAS 17 applies
to a disposal effected by entering into a finance lease and to
a sale and leaseback.
68. If, in
accordance with the recognition principle in paragraph 16, an
entity recognises in the carrying amount of an asset the cost
of a replacement for part of an investment property, it
derecognises the carrying amount of the replaced part. For
investment property accounted for using the cost model, a
replaced part may not be a part that was depreciated
separately. If it is not practicable for an entity to
determine the carrying amount of the replaced part, it may use
the cost of the replacement as an indication of what the cost
of the replaced part was at the time it was acquired or
constructed. Under the fair value model, the fair value of the
investment property may already reflect that the part to be
replaced has lost its value. In other cases it may be
difficult to discern how much fair value should be reduced for
the part being replaced. An alternative to reducing fair value
for the replaced part, when it is not practical to do so, is
to include the cost of the replacement in the carrying amount
of the asset and then to reassess the fair value, as would be
required for additions not involving replacement.
69. Gains or losses
arising from the retirement or disposal of investment property
shall be determined as the difference between the net disposal
proceeds and the carrying amount of the asset and shall be
recognised in profit or loss (unless IAS 17 requires
otherwise on a sale and leaseback) in the period
of the retirement or disposal.
70. The
consideration receivable on disposal of an investment property
is recognised initially at fair value. In particular, if
payment for an investment property is deferred, the
consideration received is recognised initially at the cash
price equivalent. The difference between the nominal amount of
the consideration and the cash price equivalent is recognised
as interest revenue in accordance with IAS 18 using the
effective interest method.
71. An entity
applies IAS 37 or other Standards, as appropriate, to any
liabilities that it retains after disposal of an investment
property.
72. Compensation
from third parties for investment property that was impaired,
lost or given up shall be recognised in profit or loss when
the compensation becomes receivable.
73. Impairments or
losses of investment property, related claims for or payments
of compensation from third parties and any subsequent purchase
or construction of replacement assets are separate economic
events and are accounted for separately as follows:
(a) impairments of
investment property are recognised in accordance with IAS 36;
(b) retirements or
disposals of investment property are recognised in accordance
with paragraphs 66-71 of this Standard;
(c) compensation
from third parties for investment property that was impaired,
lost or given up is recognised in profit or loss when it
becomes receivable; and
(d) the cost of
assets restored, purchased or constructed as replacements is
determined in accordance with paragraphs 20-29 of this
Standard.
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