A transfer requires a change in use

Learning objectives

• Explain that a transfer is made when, and only when, there is a change in use.L3, L4

Normative references

• IAS 40 §57Transfers to, or from, investment property: only when there is a change in use, supported by evidence (a non-exhaustive list of examples since 2016); a change in management's intentions, in isolation, does not provide evidence of a change in use; 2016 amendment.
• IAS 40 §58Decision to dispose of an investment property without development: the property continues to be treated as investment property until it is derecognised, with no transfer to inventories; redevelopment for continued future use as investment property: no reclassification to owner-occupied property during the works.

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

4 questions

• Under what condition may a property be transferred to or from investment property?L3
• A consolidation manager comments on transfers of investment property. Which of the manager's statements is incorrect?L3
• Gavane leased a building to a third party. The lease ended; on 1 March, Gavane sets up its own offices in it and assigns its staff there (case facts). It measures its investment property under the cost model. Which reasoning is consistent with the rule?L4
• Cygnus SA holds two investment properties (case facts). The board decides to sell the Rive property as it stands, without development, and to redevelop the Parc property, which will continue to be leased to third parties after the works. How are these properties classified in the meantime?L3