Investment property is maintained with the purpose of profits from rent or from an increase of the property’s value, or with the purpose of benefiting from both simultaneously. Investment properties are not used for operations.
Investment properties are initially disclosed at cost increased by transaction costs. Subsequently, they are measured at fair value, in accordance with rules described in Note 10.1.4. Profits and losses resulting from changes in the fair value of investment property are recognized in the statement of profit or loss under “Net change in the fair value of assets and liabilities measured at fair value” in the period when they occurred.
If property used for internal purposes becomes investment property measured at fair value, depreciation is calculated until the reclassification date, and possible impairment losses are recognized and next:
- if the carrying amount calculated as at the given date exceeds fair value, the difference is disclosed in the consolidated statement of profit or loss under “Other operating expenses”;
- if the carrying amount to date is lower than fair value, the difference is firstly recognised in the consolidated statement of profit or loss under “Other operating expenses” as a reversal of an impairment loss (to the level of the impairment loss recognised previously, but the amount recognised in the consolidated statement of profit or loss must not exceed the amount that would bring the value of property to the value that would remain after depreciation if no impairment loss was recognised), and the remaining part of the difference – in other comprehensive income under “Property reclassified from property, plant and equipment to investment property”.
On subsequent disposal of the investment property the revaluation reserve is moved to supplementary capital.