iGAAP Alert: January 2011
IASB issues amendments to IAS 12 in respect of investment properties
- iGAAP Alert: January 2011: IASB issues amendments to IAS 12 in respect of investment properties
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- iGAAP Alert: January 2011
- Area: Audit
The amendments provide an exception to the general principles of IAS 12 for investment property measured using the fair value model in IAS 40 Investment Property.
For the purposes of measuring deferred tax, the amendments introduce a rebuttable presumption that the carrying amount of the investment property will be recovered entirely through sale. The presumption can be rebutted if the investment property is held within a business model whose objective is to consume economic benefits.
The amendments are likely to have no impact on the amount of tax provided by entities that previously concluded that their investment properties will be recovered through sale, but may make it easier to justify. Entities previously unable to support recovery by sale (e.g. using use tax base), however, are likely to be impacted by the amendments, as they will now be able to presume recovery through sale. This could result in a change in their deferred tax liabilities.