CAF-1 · Chapter 4 · Question 14 of 15
If an entity uses the fair value model but cannot reliably determine the fair value of an under-construction investment property, what should it do?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Measure the property at cost until its fair value can be reliably measured or construction is complete.
Explanation
If fair value cannot be reliably measured for an under-construction property, it must be measured at cost under IAS 16 until the fair value becomes reliable or construction completes.
More IAS 40 Investment Property MCQs
- Q1Which of the following properties owned by a company would be classified as an investment property under IAS 40?
- Q2Sigma Real Estate uses the fair value model for its investment properties. At year-end, the fair value of its commercial plaza increased…
- Q3An entity owns a multi-story building. It occupies 5% of the space for its own administrative offices and leases out the remaining 95% to…
- Q4Which of the following properties is classified as an investment property under IAS 40?
- Q5If a company owns a building and leases it out to an independent third party under an operating lease, how is it classified?