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Section 16 – Investment property
16.2 Definition of investment property
16.2.1 Extract from FRS 102 Section 16.2
16.2.2 OmniPro comment – Investment property definition
16.3 Operating lease classified as investment property
16.3.1 Extract from FRS 102 Section 16.3
16.3.2 OmniPro comment – Operating lease classified as investment property
16.4 Mixed use property or property lease to other group companies classified as investment property
16.4.1 Extract from FRS 102 Section 16.4
16.4.2.1 Mixed Use property – Classified as investment property
16.4.2.2 Property leased to other group companies
16.4.2.3 Self constructed investment property
16.4.3 Initial and subsequent measurement
16.4.3.1 Extract from FRS 102 Section 16.5-16.7
16.4.3.2.1 Investment property – initial and subsequent measurement
16.4.3.2.2 Investment property and deferred tax
16.4.3.2.3 Self-constructed properties
16.4.3.2.4 Investment property purchased under abnormal credit terms
16.5 Transfers to/from investment property
16.5.1 Extract from FRS 102 Section 16.7-16.9
16.5.2 OmniPro comment – Transfer to/from investment property
16.6.1 Extract from FRS 102 Section 16.10-16.11
16.6.2 OmniPro comment – Disclosures
16.6.2.1 Investment properties – Accounting policy
16.6.2.2 Extract from notes to the Financial Statements
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The below extracts and guidance is applicable for periods beginning before 1 January 2019 and are based on the September 2015 version of FRS 102. For periods beginning on or after 1 January 2019, the March 2018 version of FRS 102 applies which incorporates the changes made by the Triennial review of FRS 102. Note the March 2018 version of FRS 102 can be voluntarily applies for periods beginning before 1 January 2019. For the extracts from the March 2018 version of FRS 102 and the related guidance please click on the following link. For details of a summary of the main changes as a result of the triennial review please see the following link.
16.3 Operating lease classified as investment property
16.3.1 Extract from FRS 102 Section 16.3
16.3 A property interest that is held by a lessee under an operating lease may be classified and accounted for as investment property using this section if, and only if, the property would otherwise meet the definition of an investment property and the lessee can measure the fair value of the property interest without undue cost or effort on an on-going basis. This classification alternative is available on a property-by-property basis.
16.3.2 OmniPro comment – Operating lease classified as investment property
Under Section 16.3 of FRS102 where an entity leases a property on an operating lease who then sublease this to another tenant and thereby meets the definition of an investment property, it then has the option to account for this as an investment property unless it incurs undue cost and effort in fair valuing the property interest. The classification can be carried out on a property by property basis for each operating lease. It is important to emphasise that there is an accounting policy choice here. It does not have to be classified as investment property.
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Example 1: Fair value movements and deferred tax impact
Example 2: Investment Property Fair value movements and deferred tax impact
Example 3: Deferred tax asset recognition
Example 4: Purchasing on deferred credit terms
Example 5: Transfer to/from investment property
Example 6: Property leased to other group companies classified as investment property
Example 7: Extract from the notes to the financial statements – note on investment property
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