IFRS Practical Guide Accounting Properties Under Construction

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The IASB’s annual improvements project provides a vehicle for making non-urgent but necessary amendments to IFRSs.

The improvements issued in May 2008 include an amendment to IAS 40 (the amended IAS 40 is referred as IAS 40A in this publication). It revises the scope of IAS 40, ‘Investment property’, (and correspondingly the scope of IAS 16, ‘Property, plant and equipment’) and introduces new requirements for accounting for properties under construction or development for future use as investment properties. These are now within the scope of IAS 40A. Previously, IAS 16 was applied to all properties under construction up to the point when construction or development was completed (except to those properties recognised as inventory in accordance with IAS 2, ‘Inventories’), regardless of the intentions for future use as either own-used property or investment property.