Dual-use property: separate sale or lease

Learning objectives

• Apply the separation criterion to a dual-use property: portions that could be sold or leased out separately are accounted for separately.L3, L4

Normative references

• IAS 40 §10Dual-use property: if the portions could be sold separately (or leased out separately under a finance lease), they are accounted for separately; if not, the property is investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• A property is partly leased to third parties and partly occupied by the entity. Which condition leads to accounting separately for the leased part and the occupied part?L3
• Altéa holds a tower in lot-based co-ownership: floors 1 to 6 are leased to third parties, floors 7 and 8 house its head office. Each floor has a separate title and could be sold on its own (case data). What is the classification?L3
• A building has shops leased on the ground floor and a service flat occupied by the entity's manager. The units have separate titles, but the entity has never considered selling them separately. In three to five sentences, justify the classification you would adopt.L4