Investment Property

Question

Our group owns a number of real estate property which are held for rental as well as capital appreciation purposes. This is the only business line of our group and we do not have any other revenue stream. We follow the fair value method as provided in IAS-40 to value our investment properties in the balance sheet.

Following are my questions:

1. Can we record fair value gain as our revenue on the face of income statement instead of presenting it as OCI ( as this is our main business)
2. Upon sale of any of these properties, can we record gain from sale as revenue instead of other income on disposal of investment properties (again for the same reason that this is our main business).

Answers with reference are appreciated.

Answer 1

As per (40.35) and gain or loss due to change in must be charge to profit or loss account not to O.C.I . so you can show your gain on face of profit or loss account..

As per (40.66), any gain on disposal of such property must be shown in profit or loss account as a gain on disposal of asset.

U cannot record gain on disposal as revenue . Revenue is cash inflow which is genereted by ordinary course of business ..Revenue recognition criteria is different and cost to generate revenue need to be eliminated from revenue..So gain is not revenue and cannot be treated as revenue.