FRS 140 - Investment Property

Properties used for operating the business (generate income) termed owner occupied properties which come under FRS 116 Property,Plant and Equipment. Property held for invesment dealt with in FRS 140 - Investment Property.

FRS 140 defines Investment Property as  

Land or a building or part of a building or land and building  held (by the owner or under finance lease) to earned rental  or for capital appreciation or BOTH.

Owner occupied properties and those held for sale in the ordinary course of business do not qualify as Invesment   Properties.

Invesment Property:

• land held for long -term (>5yrs) capital appreciation-ex land for housing,public utilities etc
• land held for undetermined future use - ex remote land for plantation
• building owned
• building that is vacant but is held to be leased out under operating leased

How to recognize?
                            Recognize as investment properties only after:
                            - construction work has completed
                            - any rental received is negotiated at arm's length
                            - at market rate

•  it is probable that future economics benefit associated with the investment property will flow to the enterprise - future economic benefit (rental income- capital appreciation)
• the cost of the asset to the investment property can be measured reliably ( cost allocation and determination)