The choice of model: fair value or cost

Learning objectives

• Explain the choice of accounting policy (fair value model or cost model) applied to all investment property.L2, L3

Normative references

• IAS 40 §30Choice of accounting policy: the fair value model or the cost model, applied to all investment property.
• IAS 40 §32All entities measure the fair value of their investment property, either for measurement (fair value model) or for disclosure (cost model); using an independent valuer with a recognised and relevant professional qualification and recent experience in the location and category of the property is encouraged but not required.

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

1 question

• Quorix holds twelve investment properties. Management wishes to measure eight under the fair value model and four under the cost model, property by property according to its preferences. Is this approach consistent with the accounting policy choice?L3