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IAS 40 Amendments - Transfers of Investment Property


Project History

The IFRS Interpretations Committee (the IFRS IC) received a request to clarify whether paragraph 57 of IAS 40 Investment Properties allows a property under construction to be transferred from inventory to investment property when there is an evident planned change in use.

IASB Exposure Draft

On 19 November 2015, the IASB issued Exposure Draft ED/2015/9 Transfers of Investment Property: Proposed amendment to IAS 40 ('the ED').

The ED proposed to amend IAS 40 guidance in order to:

  • reinforce the principle for reclassification into, or out of investment property based on change in use of property; and

  • re-present the list of circumstances in paragraphs 57(a) - 57(d) as examples of evidence of a change in use, and not as an exhaustive list.

EFRAG's Comment Letter

On 10 December 2015, EFRAG issued its draft comment letter on the ED.

On 25 March 2016, EFRAG issued its final comment letter on the ED, where it welcomes and supports the amendment, and believes it will reduce divergence in practice and, therefore, improve the quality of financial reporting under IFRS in regard to investment properties.

Amendments to IAS 40

On 8 December 2016, the IASB issued Transfers of Investment Property (Amendments to IAS 40) ​('the Amendments') to clarify whether an entity should transfer property under construction of development to, or from, investment property when there is a change in the use of such property which is supported by evidence other than specifically listed in paragraph 57 of IAS 40.

EFRAG's Endorsement Advice

On 21 February 2017, EFRAG issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of the Amendments.

On 6 April 2017, EFRAG published its final endorsement advice in which it stated that EFRAG's overall preliminary assessment was that the Amendments satisfied the criteria for endorsement for use in the EU and therefore recommended their endorsement.

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