Investor Presentaiton
CATA
THE INSTITUTE OF
CHARTERED ACCOUNTANTS OF SRI LANKA
Recognition
Recognition principles are similar to those for all other
assets
When it is probable that future economic benefits associated
with the property will flow to the entity and the cost of the
property to the entity can be reliably measured
Considering all costs incurred relating to investment
property, both costs incurred initially to acquire IP and
subsequent costs incurred.
Subsequent cost: Costs of servicing and maintenance
>Whether these costs add economic benefits?
CA TA
THE INSTITUTE OF
CHARTERED ACCOUNTANTS OF SRI LANKA
Example
Recognition
➤ Mega Ltd develops office buildings for rental.
Subsequent to completion of a building it incurs expenses such as
security, utilities and marketing that must be incurred before the
building has secured a reasonable level of occupancy.
The usual time between the building's completion and securing a
reasonable number of tenants is approximately 3 months
How to treat these expenses?
Should be expensed as incurred and relate to
maintaining the building and attracting the tenants
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