Accounting · Investment Property (IAS 40)
For several years, Jaswinder Co has applied the cost model to its investment properties. From 1 April 20X3, the fair value model was applied to investment properties. During the year ended 31 March 20X4, a fair value gain of $30m was recognised in the financial statements. There has been no change in the useful life of investment properties. What effect will this change in accounting policy have on the financial statements for the year ended 31 March 20X4?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both operating profit margin and gearing will increase
- 2Profit before income taxes will not change and gearing will increase
- 3Profit before income taxes will increase and gearing will decrease✓
- 4Other comprehensive income will increase and gearing will decrease
Correct answer
Profit before income taxes will increase and gearing will decrease
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