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Wednesday 11 December 2019

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IFRS Interpretations Committee recommends the Board to amend IAS 40

 10 May 2016


The Interpretations Committee considered a summary of the comment letters to the Exposure Draft Transfers of Investment Property (Proposed amendments to IAS 40), and discussed the proposals in the Exposure Draft.

The Interpretations Committee recommended to the Board that it should proceed with the proposed amendments to IAS 40, subject to the following:

  1. clarifying in paragraph 57 of IAS 40 that a change in management’s intentions, in isolation, does not provide evidence of a change in use;
  2. amending two of the examples in paragraph 57 of IAS 40 so that they could relate to property under construction or development as well as completed property; and
  3. emphasising, in the Basis for Conclusions, that judgement may be required to assess whether a property meets, or has ceased to meet, the definition of investment property.

The Interpretations Committee also recommended that an entity be permitted to apply either of the following transition approaches when first applying the proposed amendments to IAS 40:

  1. a full retrospective approach in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
  2. an approach for which the entity:
    1. would reassess the classification of property to reflect its use at the date of transition; and
    2. would apply the proposed amendments to changes in use that occur after the date of transition.

Next steps

The Board will discuss the Interpretations Committee's recommendations at a future Board meeting.