Evidence of the change, not intent

Learning objectives

• Distinguish evidence of a change in use (non-exhaustive list) from a mere change in management's intentions.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.

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

4 questions

• The board's decision to sell a leased property is enough, on its own, to evidence a change in use justifying its transfer to inventory.L3
• Among these facts about a property, which can evidence a change in use, as opposed to a mere management intention? (More than one answer possible.)L3
• The board of Hessane announces its intention to convert, in eighteen months, an investment property into administrative head offices; no step has been taken and the property remains leased (case data). The finance director wants to transfer it to owner-occupied property this month. In three to five sentences, justify your position.L4
• Talvane measures its investment property at fair value. Its board decides to sell a leased property after refurbishment, but no work has started and the property is still leased (case data). The controller proposes an immediate transfer to inventory. In three to five sentences, justify whether this transfer is possible and at what value it would be made.L4