IAS 40 — Change from fair value model to cost model

Date recorded:

At the request of the IASB, the Committee discussed a number of issues related to the amendment to IAS 40 paragraphs 57-60, proposed in Exposure Draft ED/2009/11 Improvements to IFRS.

The proposed amendments were (in summary):

  • Removing the requirement to transfer investment properties to IAS 2 Inventories at the commencement of development with a view to sale
  • That investment properties held for sale should be displayed as a separate category in the statement of financial position
  • That investment properties held for sale should be subject to the same disclosures as non-financial assets held for sale in accordance with IFRS 5 .

In March 2010, the comment letter analysis of respondents to the proposed changes highlighted the confusing array of interactions between IAS 40 and other IFRSs and the Committee recommended that the proposed amendment was not finalised. The staff noted that the IASB had asked the Committee to revisit the issue, noting that developments in IFRS since the Exposure Draft had clarified many of the conflicting interactions noted by constituents.


With little discussion after the staff introduction, the Committee agreed that the transfer to inventories required by IAS 40 is retained and that recognition of investment properties in accordance with different IFRSs, depending on intended use and stage of development, should continue as at present.

Measurement of investment properties

As a result of changes to the proposals in the IASB’s Fair Value Measurement Guidance project, investment properties would be measured at fair value less costs to sell, consistent with other IFRS 5 assets. There was no issue for the Committee to address. The Committee agreed.

Investment properties held for sale displayed as a separate asset category

The Committee agreed that investment properties held for sale that do not satisfy the criteria of IFRS 5 should not be displayed as a separate asset category (this is contrary to the proposal in ED/2009/11).

Next steps

The Committee agreed that no further activities were necessary because the IASB’s actions in other standard-setting projects had addressed other concerns raised by constituents. The Committee would recommend that the Board not do anything further.

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