Accounting for tax with investment properties can involve plenty of other standards: IFRS 5, IAS 36, IAS 2… the trick is to know when to use each together with IAS 40.

In this episode, I talk through the accounting for Investment Properties under IAS 40. We start with the basic definition: property held to earn rentals, for capital appreciation, or both. And then compare it with PPE under IAS 16. Here’s the thing: the same physical building can be accounted for in different ways depending on why the business is holding it. That distinction is vital in SBR.

You’ll learn how investment property can be measured at cost or fair value, how fair value gains and losses are treated, and why this differs from PPE revaluations. We also look at how IAS 40 links with other standards, including IFRS 18, IAS 36, IAS 2 and IFRS 5. Most importantly, I explain how to think through the different, progressive scenarios so you can write clear answers and earn the marks.

Thanks for listening to this episode of Pass Your SBR ACCA Exams with Tom Clendon.

If you’d like to view the exam question on screen and see my working, subscribe to the YouTube Channel:⁠⁠ ⁠⁠https://www.youtube.com/@tomclendonSBR⁠⁠⁠⁠.

For access to on-demand support and guidance for your ACCA SBR Journey, visit my website to see my current course offering:⁠⁠ ⁠⁠https://tomclendon.co.uk/⁠⁠⁠⁠.

Chapters

(0:00) Introduction to IAS 40 investment properties

(1:57) What is an investment property?

(2:25) Investment property compared with PPE

(3:37) Recap of IAS 16 accounting for PPE

(5:19) Accounting for investment properties under IAS 40

(6:35) Why identical properties can have different accounting treatments

(8:29) IFRS 18 and where gains and rental income go in profit or loss

(9:27) Investment property in the statement of cash flows

(10:38) Cost or fair value — which measurement is more useful?

(13:04) Why property classification depends on business use

(15:08) Mixed-use property and splitting the asset

(16:09) Transfers from PPE to investment property

You may think you already know PPE in IAS 16, but this one still causes problems in SBR when it is tested in an applied way.

In this episode, I take you through IAS 16 Property, Plant and Equipment. We cover the basics of PPE, including initial recognition, depreciation, revaluation, disposal, and why depreciation is about matching costs with benefits — not saving up cash to replace an asset.

You will learn how IAS 16 connects with other important exam areas, including IAS 23 borrowing costs, IAS 37 provisions, IFRS 18 presentation, IAS 7 cash flows, and sustainability reporting. I also work through practical examples on revalued assets, disposal without recycling gains to profit or loss, and decommissioning provisions, so you can see how the numbers work and understand what the examiner is really looking for.

Thanks for listening to this episode of Pass Your SBR ACCA Exams with Tom Clendon.

If you’d like to view the exam question on screen and see my working, subscribe to the YouTube Channel:⁠ ⁠⁠https://www.youtube.com/@tomclendonSBR⁠⁠⁠.

For access to on-demand support and guidance for your ACCA SBR Journey, visit my website to see my current course offering:⁠ ⁠⁠https://tomclendon.co.uk/⁠⁠⁠.

Chapters

(00:00) Why IAS 16 PPE still matters for SBR

(01:54) What PPE means and when it is recognised

(03:08) Depreciation explained simply

(04:05) The double entry for depreciation

(05:43) Changing depreciation method: policy or estimate?

(06:56) Depreciation and the cash flow statement

(08:30) Why we really charge depreciation

(10:46) Revalued PPE and why depreciation still applies

(12:24) Disposal and derecognition of PPE

(14:43) IAS 23 borrowing costs and PPE

(16:48) Decommissioning provisions and sustainability reporting

(20:36) Worked examples: revaluations, disposals and provisions

We’re going to continue our look at IAS 37 in this episode - fantastic!

We recap the three key conditions for recognising a provision, then move on to contingent assets, why prudence matters, and why you cannot simply net off a possible asset against a possible liability. I also bring in the important link with IFRS 3 and fair value, showing how a contingent liability can affect group accounts and goodwill even when it is not recognised in the subsidiary’s own books.

By listening to this episode, you will learn how to apply IAS 37 in exam-style situations, not just repeat the rules. I explain the difference between probability as a recognition issue under IAS 37 and as a measurement issue in group accounts. You will also learn how decommissioning provisions interact with PPE, why the provision must be discounted, and how both depreciation and the unwinding of the discount affect profit or loss. This is exactly the kind of application that helps you pick up marks in SBR.

Thanks for listening to this episode of Pass Your SBR ACCA Exams with Tom Clendon.

If you’d like to view the exam question on screen and see my working, subscribe to the YouTube Channel: ⁠⁠https://www.youtube.com/@tomclendonSBR⁠⁠.

For access to on-demand support and guidance for your ACCA SBR Journey, visit my website to see my current course offering: ⁠⁠https://tomclendon.co.uk/⁠⁠.

Chapters

(00:00) Introduction to IAS 37 part two

(01:25) Quick recap of the three provision criteria

(02:11) What is a contingent asset?

(03:11) Recognition rules and prudence

(04:06) Why provisions and contingent assets are not netted off

(04:53) Linking IAS 37 with IFRS 3 and fair value

(06:45) Example: unfair dismissal claim

(08:44) Group accounts: contingent liabilities and goodwill

(12:01) Decommissioning provisions and PPE

(14:48) The key issue: discounting the provision

(16:21) Depreciation and unwinding the discount

(17:03) Final exam-focused recap