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Accounting for investment properties
Investment properties are interests in land and/or buildings that are held for their investment potential, rather than for consumption in the business operations. In such cases the current value of these investments, and changes in current value, are of prime importance rather than a calculation of systematic annual depreciation. SSAP 19 therefore requires investment properties to be included in the balance sheet at their open market value, but without charging depreciation. Investment properties are thus treated differently from the generality of fixed assets, which are subject to depreciation charges to reflect, on a systematic basis, the wearing out, consumption or other loss of value of the asset required by FRS 15.
IASC is at present reviewing its standard, IAS 25 'Accounting for Investments', which includes the treatment of investment properties. The ASB is following and contributing to the international debate on investment properties and may review SSAP 19 in due course, in light of the outcome of the IASC project. SSAP 19 is effective for accounting periods starting on or after 1 July 1981.
To find out how to obtain a copy of this SSAP, go to Publications. |
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