Page 4 - 5. COMPILER QB - INDAS 40

value of property as per the valuation model recommended by the International Valuation Standards
Committee. Fair value has been computed by the method by streamlining present value of future cash flows
namely, discounted cash flow method.

The other key inputs for valuation are as follows:
The estimated rent per month per square feet for the period is expected to be in the range of Rs. 50 - Rs.
60. It is further expected to grow at the rate of 10 percent per annum for each of 3 years. The weighted
discount rate used is 12% to 13%.
Assume that the fair value of properties based on discounted cash flow method is measured at Rs. 10.50

st
crore on 31 March, 2020.
What would be the treatment of Building A and Building B in the balance sheet of Shaurya Limited? Provide
detailed disclosures and computations in line with relevant Indian accounting standards. Treat it as if you are
preparing a separate note or schedule, of the given assets in the balance sheet.

SOLUTION

Investment property is held to earn rentals or for capital appreciation or both. Ind AS 40 shall be applied in
the recognition, measurement and disclosure of investment property. An investment property shall be
measured initially at its cost. After initial recognition, an entity shall measure all of its investment properties
in accordance with the requirement of Ind AS 16 for cost model.

The measurement and disclosure of Investment property as per Ind AS 40 in the balance sheet would be

depicted as follows:

INVESTMENT PROPERTIES:
Particulars st
Period ended 31 March, 2020
(Rs. in crore)

Gross Amount:
Opening balance (A) 10.00
Additions during the year (B) 2.00
Closing balance (C) = (A) + (B) 12.00
Depreciation:
Opening balance (D) (10 / 20 x 5yrs) 2.50
Depreciation during the year (E) (0.5 + 0.05)* 0.55
Closing balance (F) = (D) + (E) 3.05
Net balance (C) - (F) 8.95

* depreciation on A + depreciation on B

st
The changes in the carrying value of investment properties for the year ended 31 March, 2020 are as
follows:
Amount recognised in Profit and Loss with respect to Investment Properties

Particulars st
Period ending 31 March, 2020
(Rs. in crore)
Rental income from investment properties (0.75 + 0.25) 1.00

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