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IASB proposes amendments to IAS 40 on transfers of investment property

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19 Nov 2015

The International Accounting Standards Board (IASB) has published an Exposure Draft (ED) of proposed amendments to IAS 40 'Investment Property'. The amendments address transfers of investment property. Comments are requested by 18 March 2016.

 

Background

The IFRS Interpretations Committee received a request for clarification of the application of paragraph 57 of IAS 40 Investment Property, which provides guidance on transfers to, or from, investment properties. More specifically, the question was whether a property under construction or development that was previously classified as inventory could be transferred to investment property when there was an evident change in use.

The Interpretations Committee referred the matter to the IASB, and at its April 2015 meeting, the IASB tentatively agreed to amend the paragraph to reinforce the principle for transfers into, or out of, investment property in IAS 40 to specify that such a transfer should only be made when there has been a change in use of the property.

 

Suggested changes

The amendments proposed in ED/2015/9 Transfers of Investment Property (Proposed amendment to IAS 40) are:

  • Paragraph 57 will be amended to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. The change of use shall consist of the property meeting, or ceasing to meet, the definition of investment property.
  • The list of examples of evidence in paragraph 57(a) – (d) will be presented as a non-exhaustive list instead of an exhaustive list.

 

Effective date and transition requirements

The ED does not contain a proposed effective date. However, the ED proposes that the amendments would be applied retrospectively and that early application should be permitted.

 

Additional information

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