1. Which of the following would be reported c.

Partly as investment property and partly as property,

as Investment Property? plant and equipment.
a. Property that is being constructed or d. Either a or b as a matter of accounting
developed for another entity. policy choice.
b. Property that is leased to another entity under
a finance lease. 5. According to PAS 40 Investment Property, when
c. Owner-occupied property awaiting sale. ancillary services are provided to the occupants of a
d. Property available for lease. property held, the property is classified as
investment property if the services are
2. Which of the following is not a characteristics a. Significant to the arrangement as a whole.
of investment property? b. Insignificant to the arrangement as a whole.
a. Held to earn rentals or for capital appreciation c. Paid for separately.
or both. d. Compensated by an amount that is sufficient to
b. Generates cash flows in conjunction with the other cover the costs of the services plus an
assets held by an entity. appropriate margin.
c. Generates cash flows largely independently of
the other assets held by an entity. 6. Investment property is initially recognized at
d. Includes only land and building. a. Cost
b. Fair value
c. Fair value plus transaction cost
3. ABC Co., owns a building. A portion of the building is d. Cost if the entity follows the cost method; fair
being rented out to various tenants under operating value if the entity follows the fair value
lease while the remainder of the building is used as method
office space. Each portion of the building can be sold
separately. How should ABC Co. report the building 7. Which statement is incorrect regarding
in its statement of financial position? measurement of investment property subsequent to
a. As property, plant and equipment initial recognition using the fair value model?
b. As investment property in its entirely a. Change to the cost method is permitted only if this
c. Partly as investment property and partly as results in a more appropriate presentation
property, plant and equipment b. Fair value should reflect the actual market state
d. Either a or b as a matter of accounting and circumstances as of the balance sheet date
policy choice c. Where a property has previously been measured at
fair value, it should cease to be measured at fair
4. ABC Co. is primarily engaged in the business of towing value, if comparable market transactions become less
ships. ABC Co. owns two buildings, one is used as frequent or market prices become less readily
head office and the other is being rented out to available
various tenants under operating leases. The building d. Gains or losses arising from changes in the fair
being rented out has 40 units. However, only 39 units value of investment property must be included in
are actually available for lease. ABC Co. retained 1 unit net profit or loss for the period in which it arises
for administration purposes. How should ABC Co.
report the building that is being rented out in its 8. Select the incorrect statement.
statement of financial position? a. Investment properties are intended for long-
a. As property, plant and equipment in its entirety. term appreciation while held for sale assets are
b. As investment property in its entirety. non- current assets acquired for immediate
disposal.
b. When the fair value of an investment property
becomes indeterminable, the fair value model is
foregone.
c. Investment property are held for appreciation or
incidental operations while owner-occupied
property are directly employed in the operation
of the entity.
d. Investment properties are not held for sale,
inventories are held for sale in the
ordinary course of business.
 transfer to or from investment property?
9. In which of the following instances demonstrate a a. The entity decides not to use anymore an office
change from owner-occupied property to investment building and starts advertising the building for
property? lease.
a. Commencement of development with a view to b. The entity starts using for administrative
sale purposes a building that was previously leased
b. End of re-development of the investment property out.
for use as investment property c. A real estate entity decides to sell a building that
c. Commencement of owner occupation was previously leased out without development.
d. End of owner occupation and commencement of a d. The entity starts the construction of a building
lease that will be rented out on a vacant lot that was
previously held in inventory.
10. Which of the following does not indicate a change in
use of a property and therefore does not cause a