Liabilities retained after disposal

Learning objectives

• Account for liabilities retained after a disposal (for example, guarantees) under the applicable Standards.L2, L3

Normative references

• IAS 40 §71Liabilities retained after the disposal of an investment property: IAS 37 or other relevant Standards apply.

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

2 questions

• An obligation that remains after the disposal of an investment property, for example a guarantee given to the buyer, disappears automatically on derecognition of the property.L2
• Quirane sells an investment property and undertakes to guarantee the buyer against structural defects for two years. The property is derecognised at the date of disposal (case facts). What does it do with its guarantee commitment?L3