Derecognition

Learning objectives

• Identify the two cases of derecognition (disposal, or permanent withdrawal from use with no future economic benefits expected).L2, L3
• Calculate, from the case data, the amount relating to derecognition and justify the basis of calculation.L2, L3
• Record the entry relating to derecognition and state its effect on the financial statements.L2, L3

Normative references

• IAS 40 §66Derecognition: on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal.

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

3 questions

• An investment property is derecognised as soon as management decides to put it up for sale.L2
• An accountant states four rules on derecognition of an investment property. Which is incorrect?L2
• A fire destroys Hortane's investment property, measured under the cost model and carried at 1,200,000. The property is permanently out of use and no disposal proceeds are expected (case facts). Which treatment is consistent with the rule?L3