The IFRS Interpretations Committee received a request to clarify whether a structure that appears to lack the physical characteristics of a building should be viewed as a 'building' and thus 'property', as described in paragraph 5 of IAS 40. The submitter described a circumstance in which an entity owns telecommunication towers and receives rental revenue in exchange for leasing spaces in the towers to telecommunication operators, to which they attach their own devices.
The Interpretations Committee noted that it is questionable whether such a tower qualifies as a ‘building’ because it lacks the features usually associated with a building, such as walls, floors and a roof. However, it expressed general support for broadening the scope of IAS 40 to also include a structure such as a telecommunication tower and to do so by focusing on the way the asset is used. However, the Interpretations Committee expressed concern that the question could also be raised in respect of other structures, such as gas storage tanks and advertising billboards. Consequently, the Interpretations Committee directed the staff to inform the IASB of its views and concerns, and to ask for the IASB’s guidance on how to proceed with this issue.
In July 2014 the IASB directed the staff to undertake preliminary research to help the IASB to decide how to proceed.
In December 2014, the IASB considered a summary of the outreach and analysis performed by the staff, and to decide what future action should be taken. The IASB decided not to pursue this issue further at the current time because there appeared to be limited demand for fair value accounting for these types of structures, and limited diversity in practice.