Dual-use property: the insignificant owner-occupied portion

Learning objectives

• Assess whether the owner-occupied portion is insignificant when the portions cannot be sold separately; this is a judgement on the facts of the case, with no threshold imposed.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

• For a property whose parts cannot be sold separately, the standard sets at 5% of the area the threshold beyond which the occupied part is significant.L3
• A management accountant comments on the classification of an indivisible property partly occupied by the entity. Which of the analyses is incorrect?L4
• Brenmore owns a 6,000 m² office building that cannot be sold in parts. It occupies 150 m², that is 2.5% of the area (case data), for an archive room. The rest is leased to third parties. Which reasoning is most consistent with the rule?L4