Accounting · Investment Property (IAS 40)
Under IAS 40, subsequent to initial recognition, investment properties held at fair value are not depreciated, whereas property, plant and equipment (PPE) held at fair value is subject to depreciation. Which of the following is a valid justification for this difference in treatment?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1An investment property is measured at its current fair value at each reporting date, meaning any consumption of its economic benefits is already reflected in the fair value changes✓
- 2Investment properties never decrease in value
- 3The useful life of an investment property cannot be reliably measured
- 4Investment properties do not generate income to match against any depreciation expense
Correct answer
An investment property is measured at its current fair value at each reporting date, meaning any consumption of its economic benefits is already reflected in the fair value changes
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