INTERNATIONAL PUBLIC SECTOR

ACCOUNTING STANDARDSTM

IPSAS 16, INVESTMENT PROPERTY

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 IPSAS 16, INVESTMENT PROPERTY
Acknowledgment
This International Public Sector Accounting Standard (IPSAS) is drawn primarily from International Accounting
Standard (IAS®) 40 (Revised 2003), Investment Property, published by the International Accounting Standards Board
(IASB®). Extracts from IAS 40 are reproduced in this publication of the International Public Sector Accounting
Standards Board (IPSASB) of the International Federation of Accountants (IFAC) with the permission of the
International Financial Reporting Standards (IFRS®) Foundation.

The approved text of the IFRS Accounting Standards is that published by the IASB in the English language, and
copies may be obtained directly from IFRS Foundation, Customer Service, Columbus Building, 7 Westferry Circus,
Canary Wharf, London E14 4HD, United Kingdom.

E-mail: customerservices@ifrs.org
Internet: www.ifrs.org

IFRS Accounting Standards, IAS Standards, and other publications of the IASB are copyright of the IFRS Foundation.

“IFRS Accounting Standards”, “IAS Standards”, “IASB”, and “IFRS Foundation” are trademarks of the IFRS
Foundation and should not be used without the approval of the IFRS Foundation.

407 IPSAS 16
 IPSAS 16, INVESTMENT PROPERTY
History of IPSAS
This version includes amendments resulting from IPSAS Standards issued up to January 31, 2025.
IPSAS 16, Investment Property was issued in December 2001.
In December 2006 the IPSASB issued a revised IPSAS 16.
Since then, IPSAS 16 has been amended by the following IPSAS Standards:
• IPSAS 47, Revenue (issued May 2023)
• IPSAS 46, Measurement (issued May 2023)
• IPSAS 45, Property, Plant, and Equipment (issued May 2023)
• IPSAS 44, Non-current Assets Held for Sale and Discontinued Operations (issued May 2022)
• IPSAS 43, Leases (issued January 2022)
• Improvements to IPSAS 2018 (issued October 2018)
• IPSAS 40, Public Sector Combinations (issued January 2017)

• The Applicability of IPSAS (issued April 2016)

• Improvements to IPSAS 2015 (issued April 2016)
• IPSAS 33, First-time Adoption of Accrual Basis International Public Sector Accounting Standards (IPSAS)
(issued January 2015)
• Improvements to IPSAS 2011 (issued October 2011)
• Improvements to IPSAS (issued January 2010)

• IPSAS 27, Agriculture (issued December 2009)

Table of Amended Paragraphs in IPSAS 16

Paragraph Affected How Affected Affected By

Introduction section Deleted Improvements to IPSAS October 2011

3 Deleted The Applicability of IPSAS April 2016

4 Deleted The Applicability of IPSAS April 2016

5 Deleted IPSAS 43 January 2022

6 Amended IPSAS 27 December 2009

Improvements to IPSAS April 2016
IPSAS 45 May 2023

7 Amended IPSAS 43 January 2022

Heading above paragraph 8 Deleted Improvements to IPSAS October 2018

8 Deleted IPSAS 43 January 2022

Heading above paragraph 9 Deleted Improvements to IPSAS October 2018

IPSAS 16 408
Paragraph Affected How Affected Affected By

9 Amended The Applicability of IPSAS April 2016

10 Amended IPSAS 43 January 2022

IPSAS 45 May 2023

12 Amended Improvements to IPSAS January 2010

IPSAS 43 January 2022

13 Amended Improvements to IPSAS January 2010

IPSAS 43 January 2022
IPSAS 45 May 2023
IPSAS 47 May 2023

18A New IPSAS 40 January 2017

19 Amended IPSAS 45 May 2023

20 Amended Improvements to IPSAS April 2016

IPSAS 43 January 2022

25A New IPSAS 43 January 2022

26 Amended IPSAS 43 January 2022

27 Amended IPSAS 43 January 2022

29 Deleted Improvements to IPSAS January 2010

33 Amended IPSAS 45 May 2023

IPSAS 46 May 2023

34 Deleted IPSAS 43 January 2022

35 Deleted IPSAS 43 January 2022

38 Amended IPSAS 46 May 2023

38A New IPSAS 43 January 2022

39 Amended IPSAS 43 January 2022

IPSAS 45 May 2023
IPSAS 46 May 2023

40 Amended Improvements to IPSAS January 2010

Improvements to IPSAS April 2016
IPSAS 45 May 2023
IPSAS 46 May 2023

41 Amended IPSAS 45 May 2023

IPSAS 46 May 2023

41A New IPSAS 43 January 2022

409 IPSAS 16
 Paragraph Affected How Affected Affected By
IPSAS 46 May 2023

41B New IPSAS 43 January 2022

41C New IPSAS 43 January 2022

IPSAS 46 May 2023

Heading above paragraph 42 Amended IPSAS 46 May 2023

42 Amended IPSAS 46 May 2023

43 Deleted IPSAS 43 January 2022

45 Deleted IPSAS 46 May 2023

46 Deleted IPSAS 46 May 2023

47 Deleted IPSAS 46 May 2023

48 Deleted IPSAS 46 May 2023

49 Amended IPSAS 43 January 2022

IPSAS 46 May 2023

49A Amended IPSAS 43 January 2022

IPSAS 46 May 2023

50 Amended IPSAS 43 January 2022

IPSAS 46 May 2023

51 Deleted IPSAS 46 May 2023

52 Deleted IPSAS 46 May 2023

53 Deleted IPSAS 46 May 2023

54 Deleted IPSAS 46 May 2023

55 Deleted IPSAS 46 May 2023

56 Deleted IPSAS 46 May 2023

57 Amended Improvements to IPSAS January 2010

IPSAS 46 May 2023

58 Deleted IPSAS 46 May 2023

59 Amended Improvements to IPSAS January 2010

IPSAS 43 January 2022
IPSAS 46 May 2023

60 Deleted IPSAS 46 May 2023

Heading above paragraph 62 Amended IPSAS 46 May 2023

IPSAS 16 410
 Paragraph Affected How Affected Affected By

62 Amended Improvements to IPSAS January 2010

IPSAS 43 January 2022
IPSAS 45 May 2023
IPSAS 46 May 2023

62A Amended Improvements to IPSAS January 2010

IPSAS 43 January 2022
IPSAS 45 May 2023
IPSAS 46 May 2023

62B Amended Improvements to IPSAS January 2010

IPSAS 46 May 2023

63 Amended Improvements to IPSAS January 2010

IPSAS 43 January 2022
IPSAS 45 May 2023
IPSAS 46 May 2023

Heading above paragraph 65 Amended IPSAS 45 May 2023

IPSAS 46 May 2023

65 Amended IPSAS 43 January 2022

IPSAS 44 May 2022
IPSAS 45 May 2023
IPSAS 46 May 2023

66 Amended Improvements to IPSAS January 2010

Improvements to IPSAS October 2018

68 Amended Improvements to IPSAS October 2018

70 Amended IPSAS 46 May 2023

71 Amended IPSAS 43 January 2022

IPSAS 45 May 2023

72 Amended IPSAS 43 January 2022

IPSAS 45 May 2023

73 Amended IPSAS 43 January 2022

IPSAS 45 May 2023

76 Amended Improvements to IPSAS October 2018

78 Amended IPSAS 43 January 2022

IPSAS 47 May 2023

79 Amended IPSAS 45 May 2023

411 IPSAS 16
 Paragraph Affected How Affected Affected By
IPSAS 46 May 2023

80 Amended IPSAS 43 January 2022

81 Amended IPSAS 47 May 2023

Heading above paragraph 85 Amended IPSAS 45 May 2023

IPSAS 46 May 2023

85 Amended IPSAS 43 January 2022

86 Amended IPSAS 43 January 2022

IPSAS 45 May 2023
IPSAS 46 May 2023

86(d) Deleted IPSAS 46 May 2023

Heading above paragraph 87 Amended IPSAS 46 May 2023

87 Amended IPSAS 40 January 2017

IPSAS 44 May 2022
IPSAS 46 May 2023

88 Amended IPSAS 43 January 2022

89 Amended IPSAS 43 January 2022

IPSAS 45 May 2023
IPSAS 46 May 2023

Heading above paragraph 89A New IPSAS 46 May 2023

89A New IPSAS 46 May 2023

89B New IPSAS 46 May 2023

89C New IPSAS 46 May 2023

89D New IPSAS 46 May 2023

89E New IPSAS 46 May 2023

89F New IPSAS 46 May 2023

Heading above paragraph 90 Amended IPSAS 45 May 2023

IPSAS 46 May 2023

90 Amended IPSAS 40 January 2017

IPSAS 44 May 2022
IPSAS 46 May 2023

91 Deleted IPSAS 33 January 2015

92 Deleted IPSAS 33 January 2015

IPSAS 16 412
 Paragraph Affected How Affected Affected By

93 Deleted IPSAS 33 January 2015

94 Deleted IPSAS 33 January 2015

95 Deleted IPSAS 33 January 2015

96 Deleted IPSAS 33 January 2015

Heading above paragraph 94 Amended IPSAS 46 May 2023

97 Amended Improvements to IPSAS October 2018

IPSAS 46 May 2023

98 Deleted IPSAS 33 January 2015

99 Deleted IPSAS 33 January 2015

Heading above paragraph 100 Amended IPSAS 46 May 2023

Heading above paragraph 100A New IPSAS 43 January 2022

100A New IPSAS 43 January 2022

Heading above paragraph 100B New Improvements to IPSAS October 2018

100B New Improvements to IPSAS October 2018

100C New Improvements to IPSAS October 2018

100D New Improvements to IPSAS October 2018

101A New Improvements to IPSAS January 2010

101B New IPSAS 33 January 2015

101C New Improvements to IPSAS April 2016

101D New The Applicability of IPSAS April 2016

101E New IPSAS 40 January 2017

101F New Improvements to IPSAS October 2018

101G New Improvements to IPSAS October 2018

101H New IPSAS 43 January 2022

101I New IPSAS 44 May 2022

101J New IPSAS 45 May 2023

101K New IPSAS 46 May 2023

101L New IPSAS 47 May 2023

102 Amended IPSAS 33 January 2015

Illustrative Decision Tree Amended Improvements to IPSAS January 2010

413 IPSAS 16
 December 2006
IPSAS 16, INVESTMENT PROPERTY
CONTENTS
Paragraph
Objective ......................................................................................................................................................... 1
Scope .............................................................................................................................................................. 2–6
Definitions........................................................................................................................................................ 7
Classification of Property as Investment Property or Owner-Occupied Property ........................................... 8–19
Recognition ..................................................................................................................................................... 20–25
Measurement at Recognition .......................................................................................................................... 26–38
Measurement after Recognition ...................................................................................................................... 39–65
Accounting Policy ..................................................................................................................................... 39–41
Current Value Model ................................................................................................................................. 42–64
Inability to Measure Fair Value Reliably............................................................................................. 62–64

Historical Cost Model ................................................................................................................................ 65

Transfers ......................................................................................................................................................... 66–76
Disposals ......................................................................................................................................................... 77–84

Disclosure........................................................................................................................................................ 85–90
Current Value Model and Historical Cost Model ...................................................................................... 85–90
Current Value Model .......................................................................................................................... 87–89

Current Value Measurement .............................................................................................................. 89A–89F

Historical Cost Model ......................................................................................................................... 90
Transitional Provisions .................................................................................................................................... 91–100

Initial Adoption of Accrual Accounting ...................................................................................................... 91–93

Current Value Model ................................................................................................................................. 94–97
Historical Cost Model ................................................................................................................................ 98–100

Effective Date .................................................................................................................................................. 101–102

Withdrawal of IPSAS 16 (2001) ...................................................................................................................... 103
Basis for Conclusions

Illustrative Decision Tree

Comparison with IAS 40

IPSAS 16 414
 INVESTMENT PROPERTY

International Public Sector Accounting Standard 16, Investment Property, is set out in paragraphs 1–103. All the
paragraphs have equal authority. IPSAS 16 should be read in the context of its objective, the Basis for Conclusions,
the Preface to International Public Sector Accounting Standards, and The Conceptual Framework for General
Purpose Financial Reporting by Public Sector Entities. IPSAS 3, Accounting Policies, Changes in Accounting
Estimates and Errors, provides a basis for selecting and applying accounting policies in the absence of explicit
guidance.

415 IPSAS 16
 INVESTMENT PROPERTY

Objective
1. The objective of this Standard is to prescribe the accounting treatment for investment property and related
disclosure requirements.

Scope
2. An entity that prepares and presents financial statements under the accrual basis of accounting shall
apply this Standard in accounting for investment property.
3. [Deleted]
4. [Deleted]
5. [Deleted]
6. This Standard does not apply to:
(a) Biological assets related to agricultural activity (see IPSAS 27, Agriculture and IPSAS 45, Property,
Plant, and Equipment); and
(b) Mineral rights and mineral reserves such as oil, natural gas, and similar non-regenerative resources.

Definitions
7. The following terms are used in this Standard with the meanings specified:
Carrying amount (for the purpose of this Standard) is the amount at which an asset is recognized in
the statement of financial position.
Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to
acquire an asset at the time of its acquisition or construction.
Investment property is property (land or a building – or part of a building – or both) held (by the owner
or by the lessee as a right-of-use asset) to earn rentals or for capital appreciation, or both, rather than
for:
(a) Use in the production or supply of goods or services, or for administrative purposes; or

(b) Sale in the ordinary course of operations.

Owner-occupied property is property held (by the owner or by the lessee as a right-of-use asset) for
use in the production or supply of goods or services, or for administrative purposes.
Terms defined in other IPSAS are used in this Standard with the same meaning as in those Standards,
and are reproduced in the Glossary of Defined Terms published separately.

Classification of Property as Investment Property or Owner-Occupied Property

8. [Deleted]
9. There are a number of circumstances in which public sector entities may hold property to earn rental and for
capital appreciation. For example, a public sector entity may be established to manage a government’s
property portfolio on a commercial basis. In this case, the property held by the entity, other than property held
for resale in the ordinary course of operations, meets the definition of an investment property. Other public
sector entities may also hold property for rentals or capital appreciation, and use the cash generated to
finance their other (service delivery) activities. For example, a university or local government may own a
building for the purpose of leasing on a commercial basis to external parties to generate funds, rather than
to produce or supply goods and services. This property would also meet the definition of investment property.

IPSAS 16 416
 INVESTMENT PROPERTY

10. Investment property is held to earn rentals or for capital appreciation, or both. Therefore, investment property
generates cash flows largely independently of the other assets held by an entity. This distinguishes
investment property from other land or buildings controlled by public sector entities, including owner-occupied
property. The production or supply of goods or services (or the use of property for administrative purposes)
can also generate cash flows. For example, public sector entities may use a building to provide goods and
services to recipients in return for full or partial cost recovery. However, the building is held to facilitate the
production of goods and services, and the cash flows are attributable not only to the building, but also to
other assets used in the production or supply process. IPSAS 45 applies to owned owner-occupied property
and IPSAS 43, Leases applies to owner-occupied property held by a lessee as a right-of-use asset.
11. In some public sector jurisdictions, certain administrative arrangements exist such that an entity may control
an asset that may be legally owned by another entity. For example, a government department may control
and account for certain buildings that are legally owned by the State. In such circumstances, references to
owner-occupied property means property occupied by the entity that recognizes the property in its financial
statements.
12. The following are examples of investment property:
(a) Land held for long-term capital appreciation rather than for short-term sale in the ordinary course of
operations. For example, land held by a hospital for capital appreciation that may be sold at a beneficial
time in the future.
(b) Land held for a currently undetermined future use. (If an entity has not determined that it will use the
land as owner-occupied property, including occupation to provide services such as those provided by
national parks to current and future generations, or for short-term sale in the ordinary course of
operations, the land is regarded as held for capital appreciation).
(c) A building owned by the entity (or a right-of-use asset relating to a building held by the entity) and
leased out under one or more operating leases on a commercial basis. For example, a university may
own a building that it leases on a commercial basis to external parties.
(d) A building that is vacant but is held to be leased out under one or more operating leases on a
commercial basis to external parties.
(e) Property that is being constructed or developed for future use as investment property.
13. The following are examples of items that are not investment property and are therefore outside the scope of
this Standard:
(a) Property held for sale in the ordinary course of operations or in the process of construction or
development for such sale (see IPSAS 12, Inventories). For example, a municipal government may
routinely supplement rate income by buying and selling property, in which case property held
exclusively with a view to subsequent disposal in the near future or for development for resale is
classified as inventory. A housing department may routinely sell part of its housing stock in the ordinary
course of its operations as a result of changing demographics, in which case any housing stock held
for sale is classified as inventory.
(b) [Deleted]

(c) Owner-occupied property (see IPSAS 43 and IPSAS 45), including (among other things) property held
for future use as owner-occupied property, property held for future development and subsequent use
as owner-occupied property, property occupied by employees such as housing for military personnel
(whether or not the employees pay rent at market rates) and owner-occupied property awaiting
disposal.

417 IPSAS 16
 INVESTMENT PROPERTY

(d) [Deleted]
(e) Property that is leased to another entity under a finance lease.
(f) Property held to provide a social service and which also generates cash inflows. For example, a
housing department may hold a large housing stock used to provide housing to low income families at
below market rental. In this situation, the property is held to provide housing services rather than for
rentals or capital appreciation and rental revenue generated is incidental to the purposes for which the
property is held. Such property is not considered an “investment property” and would be accounted for
in accordance with IPSAS 45.
(g) Property held for strategic purposes which would be accounted for in accordance with IPSAS 45.
14. In many jurisdictions, public sector entities will hold property to meet service delivery objectives rather than
to earn rental or for capital appreciation. In such situations, the property will not meet the definition of
investment property. However, where a public sector entity does hold property to earn rental or for capital
appreciation, this Standard is applicable. In some cases, public sector entities hold some property that
comprises (a) a portion that is held to earn rentals or for capital appreciation rather than to provide services,
and (b) another portion that is held for use in the production or supply of goods or services or for
administrative purposes. For example, a hospital or a university may own a building, part of which is used for
administrative purposes, and part of which is leased out as apartments on a commercial basis. If these
portions could be sold separately (or leased out separately under a finance lease), an entity accounts for the
portions separately. If the portions could not be sold separately, the property is investment property only if
an insignificant portion is held for use in the production or supply of goods or services or for administrative
purposes.
15. In some cases, an entity provides ancillary services to the occupants of a property it holds. An entity treats
such a property as investment property if the services are insignificant to the arrangement as a whole. An
example is when a government agency (a) owns an office building that is held exclusively for rental purposes
and rented on a commercial basis, and (b) also provides security and maintenance services to the lessees
who occupy the building.
16. In other cases, the services provided are significant. For example, a government may own a hotel or hostel
that it manages through its general property management agency. The services provided to guests are
significant to the arrangement as a whole. Therefore, an owner-managed hotel or hostel is owner-occupied
property, rather than investment property.
17. It may be difficult to determine whether ancillary services are so significant that a property does not qualify
as investment property. For example, a government or government agency that is the owner of a hotel may
transfer some responsibilities to third parties under a management contract. The terms of such management
contracts vary widely. At one end of the spectrum, the government’s or government agency’s position may,
in substance, be that of a passive investor. At the other end of the spectrum, the government or government
agency may simply have outsourced day-to-day functions, while retaining significant exposure to variation in
the cash flows generated by the operations of the hotel.
18. Judgment is needed to determine whether a property qualifies as investment property. An entity develops
criteria so that it can exercise that judgment consistently in accordance with the definition of investment
property, and with the related guidance in paragraphs 9–17. Paragraph 86(c) requires an entity to disclose
these criteria when classification is difficult.
18A. Judgment is also needed to determine whether the acquisition of investment property is the acquisition of an
asset or a group of assets or a public sector combination within the scope of IPSAS 40, Public Sector
Combinations. Reference should be made to IPSAS 40 to determine whether it is a public sector combination.
The discussion in paragraphs 9–18 of this Standard relates to whether or not property is owner-occupied
IPSAS 16 418
 INVESTMENT PROPERTY

property or investment property and not to determining whether or not the acquisition of property is a public
sector combination as defined in IPSAS 40. Determining whether a specific transaction meets the definition
of a public sector combination as defined in IPSAS 40 and includes an investment property as defined in this
Standard requires the separate application of both Standards.
19. In some cases, an entity owns property that is leased to, and occupied by, its controlling entity or another
controlled entity. The property does not qualify as investment property in consolidated financial statements,
because the property is owner-occupied from the perspective of the economic entity. However, from the
perspective of the entity that owns it, the property is investment property if it meets the definition in
paragraph 7. Therefore, the lessor treats the property as investment property in its individual financial
statements. This situation may arise where a government establishes a property management entity to
manage government office buildings. The buildings are then leased out to other government entities on a
commercial basis. In the financial statements of the property management entity, the property would be
accounted for as investment property. However, in the consolidated financial statements of the government,
the property would be accounted for as property, plant, and equipment in accordance with IPSAS 45.

Recognition
20. An owned investment property shall be recognized as an asset when, and only when:
(a) It is probable that the future economic benefits or service potential that are associated with the
investment property will flow to the entity; and
(b) The cost or fair value of the investment property can be measured reliably1.
21. In determining whether an item satisfies the first criterion for recognition, an entity needs to assess the degree
of certainty attaching to the flow of future economic benefits or service potential on the basis of the available
evidence at the time of initial recognition. Existence of sufficient certainty that the future economic benefits
or service potential will flow to the entity necessitates an assurance that the entity will receive the rewards
attaching to the asset, and will undertake the associated risks. This assurance is usually only available when
the risks and rewards have passed to the entity. Before this occurs, the transaction to acquire the asset can
usually be cancelled without significant penalty and, therefore, the asset is not recognized.
22. The second criterion for recognition is usually readily satisfied because the exchange transaction evidencing
the purchase of the asset identifies its cost. As specified in paragraph 27 of this Standard, under certain
circumstances an investment property may be acquired at no cost or for a nominal cost. In such cases, cost
is the investment property’s fair value as at the date of acquisition.
23. An entity evaluates under this recognition principle all its investment property costs at the time they are
incurred. These costs include costs incurred initially to acquire an investment property, and costs incurred
subsequently to add to, replace part of, or service a property.
24. Under the recognition principle in paragraph 20, an entity does not recognize in the carrying amount of an
investment property the costs of the day-to-day servicing of such a property. Rather, these costs are
recognized in surplus or deficit as incurred. Costs of day-to-day servicing are primarily the costs of labor and
consumables, and may include the cost of minor parts. The purpose of these expenditures is often described
as for the repairs and maintenance of the property.
25. Parts of investment property may have been acquired through replacement. For example, the interior walls
may be replacements of original walls. Under the recognition principle, an entity recognizes in the carrying

1
Information that is reliable is free from material error and bias, and can be depended on by users to faithfully represent that which it purports to
represent or could reasonably be expected to represent. Paragraph BC16 of IPSAS 1 discusses the transitional approach to the explanation of
reliability.

419 IPSAS 16
 INVESTMENT PROPERTY

amount of an investment property the cost of replacing part of an existing investment property at the time
that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced
is derecognized in accordance with the derecognition provisions of this Standard.
25A. An investment property held by a lessee as a right-of-use asset shall be recognized in accordance with IPSAS
43.

Measurement at Recognition
26. An owned investment property shall be measured initially at its cost (transaction costs shall be
included in this initial measurement).
27. Where an owned investment property is acquired through a non-exchange transaction, its cost shall
be measured at its fair value as at the date of acquisition.
28. The cost of a purchased investment property comprises its purchase price and any directly attributable
expenditure. Directly attributable expenditure includes, for example, professional fees for legal services,
property transfer taxes, and other transaction costs.
29. [Deleted]

30. The cost of investment property is not increased by:

(a) Start-up costs (unless they are necessary to bring the property to the condition necessary for it to be
capable of operating in the manner intended by management);
(b) Operating losses incurred before the investment property achieves the planned level of occupancy; or
(c) Abnormal amounts of wasted material, labor or other resources incurred in constructing or developing
the property.
31. If payment for investment property is deferred, its cost is the cash price equivalent. The difference between
this amount and the total payments is recognized as interest expense over the period of credit.
32. An investment property may be acquired through a non-exchange transaction. For example, a national
government may transfer at no charge a surplus office building to a local government entity, which then lets
it out at market rent. An investment property may also be acquired through a non-exchange transaction by
the exercise of powers of sequestration. In these circumstances, the cost of the property is its fair value as
at the date it is acquired.
33. Where an entity initially recognizes its investment property at fair value in accordance with paragraph 27, the
fair value is the cost of the property. The entity shall decide, subsequent to initial recognition, to adopt either
the current value model (paragraphs 42–64) or the historical cost model (paragraph 65).
34. [Deleted]
35. [Deleted]

36. One or more investment properties may be acquired in exchange for a non-monetary asset or assets, or a
combination of monetary and non-monetary assets. The following discussion refers to an exchange of one
non-monetary asset for another, but it also applies to all exchanges described in the preceding sentence.
The cost of such an investment property is measured at fair value unless (a) the exchange transaction lacks
commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably
measurable. The acquired asset is measured in this way even if an entity cannot immediately derecognize
the asset given up. If the acquired asset is not measured at fair value, its cost is measured at the carrying
amount of the asset given up.

IPSAS 16 420
 INVESTMENT PROPERTY

37. An entity determines whether an exchange transaction has commercial substance by considering the extent
to which its future cash flows or service potential is expected to change as a result of the transaction. An
exchange transaction has commercial substance if:
(a) The configuration (risk, timing, and amount) of the cash flows or service potential of the asset received
differs from the configuration of the cash flows or service potential of the asset transferred; or
(b) The entity-specific value of the portion of the entity’s operations affected by the transaction changes
as a result of the exchange; and
(c) The difference in (a) or (b) is significant relative to the fair value of the assets exchanged.
For the purpose of determining whether an exchange transaction has commercial substance, the entity-
specific value of the portion of the entity’s operations affected by the transaction shall reflect post-tax cash
flows, if tax applies. The result of these analyses may be clear without an entity having to perform detailed
calculations.
38. The fair value of an asset is reliably measurable if (a) the variability in the range of reasonable fair value
measurements is not significant for that asset or (b) the probabilities of the various measurements within the
range can be reasonably assessed and used when measuring fair value. If the entity is able to measure
reliably the fair value of either the asset received or the asset given up, then the fair value of the asset given
up is used to measure cost unless the fair value of the asset received is more clearly evident.
38A. An investment property held by a lessee as a right-of-use asset shall be measured initially in accordance
with IPSAS 43.

Measurement after Recognition

Accounting Policy
39. With the exception noted in paragraph 41A, an entity shall choose as its accounting policy either the
current value model in paragraphs 42–64 or the historical cost model in paragraph 65, and shall apply
that policy to all of its investment property.
40. IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors states that a voluntary change
in accounting policy shall be made only if the change results in the financial statements providing faithfully
representative and more relevant information about the effects of transactions, other events or conditions on
the entity’s financial position, financial performance or cash flows. It is highly unlikely that a change from the
current value model to the historical cost model will result in a more relevant presentation.
41. This Standard requires all entities to measure the fair value of investment property, for the purpose of either
measurement (if the entity uses the current value model) or disclosure (if it uses the historical cost model).
An entity is encouraged, but not required, to measure the fair value of investment property on the basis of a
valuation by an independent valuer who holds a recognized and relevant professional qualification and has
recent experience in the location and category of the investment property being valued.
41A. An entity may:

(a) Choose either the current value model or the historical cost model for all investment property
backing liabilities that pay a return linked directly to the fair value of, or returns from, specified
assets including that investment property; and
(b) Choose either the current value model or the historical cost model for all other investment
property, regardless of the choice made in (a).

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 INVESTMENT PROPERTY

41B. Some insurers and other entities operate an internal property fund that issues notional units, with some units
held by investors in linked contracts and others held by the entity. Paragraph 41A does not permit an entity
to measure the property held by the fund partly at cost and partly at fair value.
41C. If an entity chooses different models for the two categories described in paragraph 41A, sales of investment
property between pools of assets measured using different models shall be recognized at fair value and the
cumulative change in fair value shall be recognized in surplus or deficit. Accordingly, if an investment property
is sold from a pool in which the current value model is used into a pool in which the historical cost model is
used, the property’s fair value at the date of the sale becomes its deemed cost.

Current Value Model

42. After initial recognition, an entity that chooses the current value model shall measure all of its
investment property at fair value, except in the cases described in paragraph 62.
43. [Deleted]
44. A gain or loss arising from a change in the fair value of investment property shall be recognized in
surplus or deficit for the period in which it arises.
45. [Deleted]
46. [Deleted]
47. [Deleted]

48. [Deleted]
49. When measuring the fair value of investment property in accordance with Appendix D of IPSAS 46, an entity
shall ensure that the fair value reflects, among other things, rental revenue from current leases and other
assumptions that market participants would use when pricing the investment property under current market
conditions.
49A. When a lessee uses the current value model to measure an investment property that is held as a right-of-
use asset, it shall measure the right-of-use asset, and not the underlying asset, at fair value.
50. IPSAS 43 specifies the basis for initial recognition of the cost of an investment property held by a lessee as
a right-of-use asset. Paragraph 42 requires investment property held by a lessee as a right-of-use asset to
be remeasured, if necessary, to fair value if the entity chooses the current value model. When lease payments
are at market rates, the fair value of an investment property held by a lessee as a right-of-use asset at
acquisition, net of all expected lease payments (including those relating to recognized lease liabilities), should
be zero. Thus, remeasuring a right-of-use asset from cost in accordance with IPSAS 43 to fair value in
accordance with paragraph 42 (taking into account the requirements in paragraph 59) should not give rise to
any initial gain or loss, unless fair value is measured at different times. This could occur when an election to
apply the fair value basis is made after initial recognition.
51. [Deleted]
52. [Deleted]

53. [Deleted]
54. [Deleted]
55. [Deleted]

56. [Deleted]

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57. In exceptional cases, there is clear evidence when an entity first acquires an investment property (or when
an existing property first becomes an investment property after a change in use) that the variability in the
range of reasonable fair value measurements will be so great, and the probabilities of the various outcomes
so difficult to assess, that the usefulness of a single measure of fair value is negated. This may indicate that
the fair value of the property will not be reliably measurable on a continuing basis (see paragraph 62).
58. [Deleted]
59. In determining the carrying amount of investment property under the fair value basis, an entity does not
double-count assets or liabilities that are recognized as separate assets or liabilities. For example:
(a) Equipment such as elevators or air-conditioning is often an integral part of a building and is generally
included in the fair value of the investment property, rather than recognized separately as property,
plant, and equipment.
(b) If an office is leased on a furnished basis, the fair value of the office generally includes the fair value
of the furniture, because the rental revenue relates to the furnished office. When furniture is included
in the fair value of investment property, an entity does not recognize that furniture as a separate asset.
(c) The fair value of investment property excludes prepaid or accrued lease revenue, because the entity
recognizes it as a separate liability or asset.
(d) The fair value of investment property held by a lessee as a right-of-use asset reflects expected cash
flows (including variable lease payments that are expected to become payable). Accordingly, if a
valuation obtained for a property is net of all payments expected to be made, it will be necessary to
add back any recognized lease liability, to arrive at the carrying amount of the investment property
using the fair value basis.
60. [Deleted]
61. In some cases, an entity expects that the present value of its payments relating to an investment property
(other than payments relating to recognized liabilities) will exceed the present value of the related cash
receipts. An entity applies IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets to determine
whether to recognize a liability and, if so, how to measure it.

Inability to Measure Fair Value Reliably

62. There is a rebuttable presumption that an entity can reliably measure the fair value of an investment
property on a continuing basis. However, in exceptional cases, there is clear evidence when an entity
first acquires an investment property (or when an existing property first becomes investment
property after a change in use) that the fair value of the investment property is not reliably measurable
on a continuing basis. This arises when, and only when, the market for comparable property is
inactive (e.g., there are few recent transactions, price quotations are not current or observed
transaction prices indicate that the seller was forced to sell) and alternative reliable measurements
of fair value (for example, based on discounted cash flow projections) are not available. If an entity
determines that the fair value of an investment property under construction is not reliably measurable
but expects the fair value of the property to be reliably measurable when construction is complete, it
shall measure that investment property under construction at historical cost until either its fair value
becomes reliably measurable or construction is completed (whichever is earlier). If an entity
determines that the fair value of an investment property (other than an investment property under
construction) is not reliably measurable on a continuing basis, the entity shall measure that
investment property using the historical cost model in IPSAS 45 for owned investment property or in
accordance with IPSAS 43 for investment property held by a lessee as a right-of-use asset. The

423 IPSAS 16
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residual value of the investment property shall be assumed to be zero. The entity shall continue to
apply IPSAS 43 or IPSAS 45 until disposal of the investment property.
62A. Once an entity becomes able to measure reliably the fair value of an investment property under construction
that has previously been measured at cost, it shall measure that property at its fair value. Once construction
of that property is complete, it is presumed that fair value can be measured reliably. If this is not the case, in
accordance with paragraph 62, the property shall be accounted for using the historical cost model in
accordance with IPSAS 45 for owned assets or IPSAS 43 for investment property held by a lessee as a right-
of-use asset.
62B. The presumption that the fair value of investment property under construction can be measured reliably can
be rebutted only on initial recognition. An entity that has measured an item of investment property under
construction at fair value may not conclude that the fair value of the completed investment property cannot
be measured reliably.
63. In the exceptional cases when an entity is compelled, for the reason given in paragraph 62, to measure an
investment property using the historical cost model in accordance with IPSAS 45 or IPSAS 43, it measures
at fair value all its other investment property, including investment property under construction. In these
cases, although an entity may use the historical cost model for one investment property, the entity shall
continue to account for each of the remaining properties using the current value model.
64. If an entity has previously measured an investment property at fair value, it shall continue to measure
the property at fair value until disposal (or until the property becomes owner-occupied property or
the entity begins to develop the property for subsequent sale in the ordinary course of operations)
even if comparable market transactions become less frequent or market prices become less readily
available.

Historical Cost Model

65. After initial recognition, an entity that chooses the historical cost model shall measure investment
property:
(a) In accordance with IPSAS 44, Non-current Assets Held for Sale and Discontinued Operations if
it meets the criteria to be classified as held for sale (or is included in a disposal group that is
classified as held for sale);
(b) In accordance with IPSAS 43 if it is held by a lessee as a right-of-use asset and is not held for
sale in accordance with IPSAS 44; and
(c) In accordance with the requirements in IPSAS 45 for the historical cost model in all other cases.

Transfers
66. An entity shall transfer a property to or from investment property when, and only when, there is a
change in use. A change in use occurs when the property meets, or ceases to meet, the definition of
investment property and there is evidence of the change in use. In isolation, a change in
management’s intentions for the use of a property does not provide evidence of a change in use.
Examples of evidence of a change in use include:
(a) Commencement of owner-occupation, or of development with a view to owner-occupation, for
a transfer from investment property to owner-occupied property;
(b) Commencement of development with a view to sale, for a transfer from investment property to
inventories;

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(c) End of owner-occupation, for a transfer from owner-occupied property to investment property;
and
(d) Inception of an operating lease (on a commercial basis) to another party, for a transfer from
inventories to investment property.
(e) [Deleted]
67. A government’s use of property may change over time. For example, a government may decide to occupy a
building currently used as an investment property, or to convert a building currently used as naval quarters
or for administrative purposes into a hotel and to let that building to private sector operators. In the former
case, the building would be accounted for as an investment property until commencement of occupation. In
the latter case, the building would be accounted for as property, plant, and equipment until its occupation
ceased and it is reclassified as an investment property.
68. When an entity decides to dispose of an investment property without development, it continues to treat the
property as an investment property until it is derecognized (eliminated from the statement of financial position)
and does not reclassify it as inventory. Similarly, if an entity begins to redevelop an existing investment
property for continued future use as investment property, the property remains an investment property and
is not reclassified as owner-occupied property during the redevelopment.
69. A government property department may regularly review its buildings to determine whether they are meeting
its requirements, and as part of that process may identify, and hold, certain buildings for sale. In this situation,
the building may be considered inventory. However, if the government decided to hold the building for its
ability to generate rent revenue and its capital appreciation potential, it would be reclassified as an investment
property on commencement of any subsequent operating lease.
70. Paragraphs 71–76 apply to recognition and measurement issues that arise when an entity uses the current
value model for investment property. When an entity uses the historical cost model, transfers between
investment property, owner-occupied property, and inventories do not change the carrying amount of the
property transferred, and they do not change the cost of that property for measurement or disclosure
purposes.
71. For a transfer from investment property carried at fair value to owner-occupied property or
inventories, the property’s cost for subsequent accounting in accordance with IPSAS 43, IPSAS 45
or IPSAS 12, shall be its fair value at the date of change in use.
72. If an owner-occupied property becomes an investment property that will be carried at fair value, an
entity shall apply IPSAS 45 for owned property and IPSAS 43 for property held by a lessee as a right-
of-use asset up to the date of change in use. The entity shall treat any difference at that date between
the carrying amount of the property in accordance with IPSAS 45 or IPSAS 43, and its fair value in
the same way as a revaluation in accordance with IPSAS 45.
73. Up to the date when an owner-occupied property becomes an investment property carried at fair value, an
entity depreciates the property (or right-of-use asset) and recognizes any impairment losses that have
occurred. The entity treats any difference at that date between the carrying amount of the property in
accordance with IPSAS 45 or IPSAS 43, and its fair value in the same way as a revaluation in accordance
with IPSAS 45. In other words:
(a) Any resulting decrease in the carrying amount of the property is recognized in surplus or deficit.
However, to the extent that an amount is included in revaluation surplus for that property, the decrease
is charged against that revaluation surplus.
(b) Any resulting increase in the carrying amount is treated as follows:

425 IPSAS 16
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(i) To the extent that the increase reverses a previous impairment loss for that property, the
increase is recognized in surplus or deficit. The amount recognized in surplus or deficit does not
exceed the amount needed to restore the carrying amount to the carrying amount that would
have been determined (net of depreciation) if no impairment loss had been recognized.
(ii) Any remaining part of the increase is credited directly to net assets/equity in revaluation surplus.
On subsequent disposal of the investment property, the revaluation surplus included in net
assets/equity may be transferred to accumulated surpluses or deficits. The transfer from
revaluation surplus to accumulated surpluses or deficits is not made through surplus or deficit.
74. For a transfer from inventories to investment property that will be carried at fair value, any difference
between the fair value of the property at that date and its previous carrying amount shall be
recognized in surplus or deficit.
75. The treatment of transfers from inventories to investment property that will be carried at fair value is consistent
with the treatment of sales of inventories.

Guidance on Initially Measuring Self-Constructed Investment Property at Fair Value

76. When an entity completes the construction or development of a self-constructed investment property
that will be carried at fair value, or when its fair value becomes reliably measurable (whichever is
earlier), any difference between the fair value of the property at that date and its previous carrying
amount shall be recognized in surplus or deficit.

Disposals
77. An investment property shall be derecognized (eliminated from the statement of financial position)
on disposal or when the investment property is permanently withdrawn from use and no future
economic benefits or service potential are expected from its disposal.
78. The disposal of an investment property may be achieved by sale or by entering into a finance lease. The
date of disposal for the investment property is the date the recipient obtains control of the investment property
in accordance with the requirements in IPSAS 47, Revenue. IPSAS 43 applies to a disposal effected by
entering into a finance lease and to a sale and leaseback.
79. If, in accordance with the recognition principle in paragraph 20, an entity recognizes in the carrying amount
of an asset the cost of a replacement for part of an investment property, it derecognizes the carrying amount
of the replaced part. For investment property accounted for using the historical cost model, a replaced part
may not be a part that was depreciated separately. If it is not practicable for an entity to determine the carrying
amount of the replaced part, it may use the cost of the replacement as an indication of what the cost of the
replaced part was at the time it was acquired or constructed. Under the current value model, the fair value of
the investment property may already reflect that the part to be replaced has lost its value. In other cases, it
may be difficult to discern how much fair value should be reduced for the part being replaced. An alternative
to reducing fair value for the replaced part, when it is not practical to do so, is to include the cost of the
replacement in the carrying amount of the asset and then to reassess the fair value, as would be required for
additions not involving replacement.
80. Gains or losses arising from the retirement or disposal of investment property shall be determined
as the difference between the net disposal proceeds and the carrying amount of the asset, and shall
be recognized in surplus or deficit (unless IPSAS 43 requires otherwise on a sale and leaseback) in
the period of the retirement or disposal.
81. The amount of consideration to be included in the surplus or deficit arising from the derecognition of an
investment property is determined in accordance with the requirements for determining the transaction

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consideration in paragraphs 109–132 of IPSAS 47. Subsequent changes to the estimated amount of
consideration included in surplus or deficit shall be accounted for in accordance with the requirements for
changes in the transaction consideration in IPSAS 47.
82. An entity applies IPSAS 19 or other standards, as appropriate, to any liabilities that it retains after disposal
of an investment property.
83. Compensation from third parties for investment property that was impaired, lost, or given up shall be
recognized in surplus or deficit when the compensation becomes receivable.
84. Impairments or losses of investment property, related claims for or payments of compensation from third
parties, and any subsequent purchase or construction of replacement assets are separate economic events
and are accounted for separately as follows:
(a) Impairments of investment property are recognized in accordance with IPSAS 21 or IPSAS 26, as
appropriate;
(b) Retirements or disposals of investment property are recognized in accordance with paragraphs 77–82
of this Standard;
(c) Compensation from third parties for investment property that was impaired, lost, or given up is
recognized in surplus or deficit when it becomes receivable; and
(d) The cost of assets restored, purchased, or constructed as replacements is determined in accordance
with paragraphs 26–38 of this Standard.

Disclosure
Current Value Model and Historical Cost Model

85. The disclosures below apply in addition to those in IPSAS 43. In accordance with IPSAS 43, the owner of an
investment property provides lessors’ disclosures about leases into which it has entered. A lessee that holds
an investment property as a right-of-use asset provides lessees’ disclosures as required by IPSAS 43 and
lessors’ disclosures as required by IPSAS 43 for any operating leases into which it has entered.
86. An entity shall disclose:
(a) Whether it applies the current value or the historical cost model;

(b) [Deleted]
(c) When classification is difficult (see paragraph 18), the criteria it uses to distinguish investment
property from owner-occupied property and from property held for sale in the ordinary course
of operations;
(d) [Deleted]
(e) The extent to which the fair value of investment property (as measured or disclosed in the
financial statements) is based on a valuation by an independent valuer who holds a recognized
and relevant professional qualification and has recent experience in the location and category
of the investment property being valued. If there has been no such valuation, that fact shall be
disclosed;
(f) The amounts recognized in surplus or deficit for:
(i) Rental revenue from investment property;
(ii) Direct operating expenses (including repairs and maintenance) arising from investment
property that generated rental revenue during the period; and

427 IPSAS 16
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(iii) Direct operating expenses (including repairs and maintenance) arising from investment
property that did not generate rental revenue during the period.
(g) The existence and amounts of restrictions on the realizability of investment property or the
remittance of revenue and proceeds of disposal; and
(h) Contractual obligations to purchase, construct, or develop investment property or for repairs,
maintenance, or enhancements.

Current Value Model

87. In addition to the disclosures required by paragraph 86, an entity that applies the current value model
in paragraphs 42–64 shall disclose a reconciliation between the carrying amounts of investment
property at the beginning and end of the period, showing the following:
(a) Additions, disclosing separately those additions resulting from acquisitions and those
resulting from subsequent expenditure recognized in the carrying amount of an asset;
(b) Additions resulting from acquisitions through public sector combinations;
(c) Assets classified as held for sale or included in a disposal group classified as held for sale in
accordance with IPSAS 44 and other disposals;
(d) Net gains or losses from fair value adjustments;
(e) The net exchange differences arising on the translation of the financial statements into a
different presentation currency, and on translation of a foreign operation into the presentation
currency of the reporting entity;
(f) Transfers to and from inventories and owner-occupied property; and

(g) Other changes.

88. When a valuation obtained for investment property is adjusted significantly for the purpose of the
financial statements, for example to avoid double-counting of assets or liabilities that are recognized
as separate assets and liabilities as described in paragraph 59, the entity shall disclose a
reconciliation between the valuation obtained and the adjusted valuation included in the financial
statements, showing separately the aggregate amount of any recognized lease liabilities that have
been added back, and any other significant adjustments.
89. In the exceptional cases referred to in paragraph 62, when an entity measures investment property
using the historical cost model in IPSAS 45 or in accordance with IPSAS 43, the reconciliation
required by paragraph 87 shall disclose amounts relating to that investment property separately from
amounts relating to other investment property. In addition, an entity shall disclose:
(a) A description of the investment property;

(b) An explanation of why fair value cannot be measured reliably;

(c) If possible, the range of estimates within which fair value is highly likely to lie; and
(d) On disposal of investment property not carried at fair value:

(i) The fact that the entity has disposed of investment property not carried at fair value;
(ii) The carrying amount of that investment property at the time of sale; and
(iii) The amount of gain or loss recognized.

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Current Value Measurement

89A. An entity shall disclose information that helps users of its financial statements assess both of the
following:
(a) For investment properties that are measured at fair value on a recurring or non‑recurring basis
in the statement of financial position after initial recognition, the measurement techniques and
inputs used to develop those measurements; and
(b) For recurring fair value measurements using significant unobservable inputs (Level 3), the
effect of the measurements on surplus or deficit or net assets/equity for the period.
89B. To meet the objectives in paragraph 89A, an entity shall consider all the following:
(a) The level of detail necessary to satisfy the disclosure requirements;
(b) How much emphasis to place on each of the various requirements;
(c) How much aggregation or disaggregation to undertake; and
(d) Whether users of financial statements need additional information to evaluate the quantitative
information disclosed.
If the disclosures provided in accordance with this IPSAS and other IPSAS are insufficient to meet the
objectives in paragraph 89A, an entity shall disclose additional information necessary to meet those
objectives.
89C. To meet the objectives in paragraph 89A, an entity shall disclose, at a minimum, the following information for
each class of investment property (see paragraph 89D for information on determining appropriate classes of
investment property) measured at fair value (including measurements based on fair value within the scope
of IPSAS 46, Measurement) in the statement of financial position after initial recognition:
(a) For recurring and non‑recurring fair value measurements, the fair value measurement at the end of the
reporting period, and for non‑recurring fair value measurements, the reasons for the measurement.
Recurring fair value measurements of investment property are those that this Standard requires or
permits in the statement of financial position at the end of each reporting period. Non‑recurring fair
value measurements of investment property are those that this Standard requires or permits in the
statement of financial position in particular circumstances;
(b) For recurring and non‑recurring fair value measurements, whether the fair value measurements are
estimated using observable or unobservable inputs. For recurring and non‑recurring fair value
measurements, the level of the fair value hierarchy within which the fair value measurements are
categorized in their entirety (Level 1, 2 or 3);
(c) For recurring and non‑recurring fair value measurements estimated using unobservable inputs, a
description of the measurement technique(s) and the inputs used in the fair value measurement. If
there has been a change in measurement technique (e.g., changing from a market approach to an
income approach or the use of an additional measurement technique), the entity shall disclose that
change and the reason(s) for making it. For fair value measurements categorized within Level 3 of the
fair value hierarchy, or for fair value measurements estimated using unobservable inputs, an entity
shall provide quantitative information about the significant unobservable inputs used in the fair value
measurement. An entity is not required to create quantitative information to comply with this disclosure
requirement if quantitative unobservable inputs are not developed by the entity when measuring fair
value (e.g., when an entity uses prices from prior transactions or third‑party pricing information without
adjustment). However, when providing this disclosure an entity cannot ignore quantitative

429 IPSAS 16
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unobservable inputs that are significant to the fair value measurement and are reasonably available to
the entity;
(d) For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, a
reconciliation from the opening balances to the closing balances, disclosing separately changes during
the period attributable to the following:
(i) Total gains or losses for the period recognized in surplus or deficit, and the line item(s) in surplus
or deficit in which those gains or losses are recognized;
(ii) Total gains or losses for the period recognized in net assets/equity, and the line item(s) in net
assets/equity in which those gains or losses are recognized; and
(iii) Purchases, sales, issues and settlements (each of those types of changes disclosed separately).
(e) For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the amount
of the total gains or losses for the period in (d)(i) included in surplus or deficit that is attributable to the
change in unrealized gains or losses relating to those investment properties held at the end of the
reporting period, and the line item(s) in surplus or deficit in which those unrealized gains or losses are
recognized;
(f) For recurring and non‑recurring fair value measurements categorized within Level 3 of the fair value
hierarchy, a description of the valuation processes used by the entity (including, for example, how an
entity decides its valuation policies and procedures and analyses changes in fair value measurements
from period to period); and
(g) For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, a narrative
description of the sensitivity of the fair value measurement to changes in unobservable inputs if a
change in those inputs to a different amount might result in a significantly higher or lower fair value
measurement. If there are interrelationships between those inputs and other unobservable inputs used
in the fair value measurement, an entity shall also provide a description of those interrelationships and
of how they might magnify or mitigate the effect of changes in the unobservable inputs on the fair value
measurement. To comply with that disclosure requirement, the narrative description of the sensitivity
to changes in unobservable inputs shall include, at a minimum, the unobservable inputs disclosed
when complying with (c).
89D. An entity shall determine the appropriate disaggregation of investment property on the basis of the following:

(a) The nature, characteristics and risks of the investment property; and
(b) The level of the fair value hierarchy within which the fair value measurement is categorized, or whether
the fair value is observable or unobservable.
The disaggregation may need to be greater for fair value measurements categorized within Level 3 of the fair
value hierarchy because those measurements have a greater degree of uncertainty and subjectivity.
Determining the appropriate disaggregation of investment property for which disclosures about fair value
measurements should be provided requires judgment. Investment property will often require greater
disaggregation than the line items presented in the statement of financial position. However, an entity shall
provide information sufficient to permit reconciliation to the line items presented in the statement of financial
position. If another IPSAS specifies the disaggregation of investment property, an entity may use that
disaggregation in providing the disclosures required in this Standard if that disaggregation meets the
requirements in this paragraph.
89E. For each class of investment property not measured at fair value in the statement of financial position but for
which the fair value is disclosed, an entity shall disclose the information required by paragraph 89C(b), (c)

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and (g). However, an entity is not required to provide the quantitative disclosures about significant
unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy,
or for fair value measurements estimated using unobservable inputs, required by paragraph 89C(c). For such
investment properties, an entity does not need to provide the other disclosures required by this Standard.
89F. An entity shall present the quantitative disclosures required by this Standard in a tabular format unless
another format is more appropriate.

Historical Cost Model

90. In addition to the disclosures required by paragraph 86, an entity that applies the historical cost
model in paragraph 65 shall disclose:
(a) The depreciation methods used;
(b) The useful lives or the depreciation rates used;
(c) The gross carrying amount and the accumulated depreciation (aggregated with accumulated
impairment losses) at the beginning and end of the period;
(d) The reconciliation of the carrying amount of investment property at the beginning and end of
the period, showing the following:
(i) Additions, disclosing separately those additions resulting from acquisitions and those
resulting from subsequent expenditure recognized as an asset;
(ii) Additions resulting from acquisitions through public sector combinations;
(iii) Assets classified as held for sale or included in a disposal group classified as held for
sale in accordance with IPSAS 44 and other disposals;
(iv) Depreciation;
(v) The amount of impairment losses recognized, and the amount of impairment losses
reversed, during the period in accordance with IPSAS 21 or IPSAS 26, as appropriate;
(vi) The net exchange differences arising on the translation of the financial statements into a
different presentation currency, and on translation of a foreign operation into the
presentation currency of the reporting entity;
(vii) Transfers to and from inventories and owner-occupied property; and
(viii) Other changes; and
(e) The fair value of investment property. In the exceptional cases described in paragraph 62, when
an entity cannot measure the fair value of the investment property reliably, the entity shall
disclose:
(i) A description of the investment property;

(ii) An explanation of why fair value cannot be measured reliably; and

(iii) If possible, the range of estimates within which fair value is highly likely to lie.

Transitional Provisions
91. [Deleted]
92. [Deleted]
93. [Deleted]

431 IPSAS 16
 INVESTMENT PROPERTY

Current Value Model

94. [Deleted]
95. [Deleted]
96. [Deleted]
97. An entity that (a) has previously applied IPSAS 16 (2001), and (b) elects for the first time to classify and
account for some or all eligible property interests held under operating leases as investment property, shall
recognize the effect of that election as an adjustment to the opening balance of accumulated surpluses or
deficits for the period in which the election is first made. In addition:
(a) If the entity has previously disclosed publicly (in financial statements or otherwise) the fair value of its
investment property in earlier periods (measured on a basis that satisfies the definition of fair value
and the guidance in Appendix D of IPSAS 46), the entity is encouraged, but not required:
(i) To adjust the opening balance of accumulated surpluses or deficits for the earliest period
presented for which such fair value was disclosed publicly; and
(ii) To restate comparative information for those periods; and

(b) If the entity has not previously disclosed publicly the information described in (a), it shall not restate
comparative information and shall disclose that fact.

Historical Cost Model

98. [Deleted]
99. [Deleted]
100. For entities that have previously applied IPSAS 16 (2001), the requirements of paragraphs 36–38
regarding the initial measurement of an investment property acquired in an exchange of assets
transaction shall be applied prospectively only to future transactions.

IPSAS 43

100A. An entity applying IPSAS 43, and its related amendments to this Standard, for the first time shall
apply the transition requirements in IPSAS 43 to its investment property held as a right-of-use asset.

Transfers of Investment Property

100B. Improvements to IPSAS, 2018, issued in October 2018, amended paragraphs 66 and 68. An entity shall
apply those amendments to changes in use that occur on or after the beginning of the annual reporting period
in which the entity first applies the amendments (the date of initial application). At the date of initial application,
an entity shall reassess the classification of property held at that date and, if applicable, reclassify property
applying paragraphs 9–18 to reflect the conditions that exist at that date.
100C. Notwithstanding the requirements in paragraph 100B, an entity is permitted to apply the amendments to
paragraphs 66 and 68 retrospectively in accordance with IPSAS 3 if, and only if, that is possible without the
use of hindsight.
100D. If, in accordance with paragraph 100B, an entity reclassifies property at the date of initial application, the
entity shall:
(a) Account for the reclassification applying the requirements in paragraphs 70–75. In applying paragraphs
70–75, an entity shall:
(i) Read any reference to the date of change in use as the date of initial application; and

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(ii) Recognize any amount that, in accordance with paragraphs 70–75, would have been recognized
in surplus or deficit as an adjustment to the opening balance of accumulated surplus or deficit at
the date of initial application.
(b) Disclose the amounts reclassified to, or from, investment property in accordance with paragraph 100B.
The entity shall disclose those amounts reclassified as part of the reconciliation of the carrying amount
of investment property at the beginning and end of the period as required by paragraphs 87 and 90.

Effective Date
101. An entity shall apply this Standard for annual financial statements covering periods beginning on or
after January 1, 2008. Earlier application is encouraged. If an entity applies this Standard for a period
beginning before January 1, 2008, it shall disclose that fact.
101A. Paragraphs 12, 13, 40, 57, 59, 62, 63, and 66 were amended, paragraph 29 was deleted and paragraphs
62A and 62B were added by Improvements to IPSAS issued in January 2010. An entity shall apply
those amendments prospectively for annual financial statements covering periods beginning on or
after January 1, 2011. An entity is encouraged to apply the amendments to investment property under
construction from any date before January 1, 2011 provided that the fair values of investment
properties under construction were determined at those dates. If an entity applies the amendments
for a period beginning before January 1, 2011, it shall disclose that fact and at the same time apply
the amendments to paragraphs 8 and 107A of IPSAS 17.
101B. Paragraphs 91, 92, 93, 94, 95, 96, 98, 99 and 102 were amended by IPSAS 33, First-time Adoption of
Accrual Basis International Public Sector Accounting Standards (IPSAS) issued in January 2015. An
entity shall apply those amendments for annual financial statements covering periods beginning on
or after January 1, 2017. Earlier application is permitted. If an entity applies IPSAS 33 for a period
beginning before January 1, 2017, the amendments shall also be applied for that earlier period.
101C. Paragraph 40 was amended by Improvements to IPSAS 2015 issued in April 2016. An entity shall
apply this amendment for annual financial statements covering periods beginning on or after
January 1, 2017. Earlier application is encouraged. If an entity applies the amendment for a period
beginning before January 1, 2017 it shall disclose that fact.
101D. Paragraphs 3 and 4 were deleted and paragraph 9 was amended by The Applicability of IPSAS, issued
in April 2016. An entity shall apply those amendments for annual financial statements covering
periods beginning on or after January 1, 2018. Earlier application is encouraged. If an entity applies
the amendments for a period beginning before January 1, 2018, it shall disclose that fact.
101E. Paragraph 18A was added and paragraphs 87 and 90 amended by IPSAS 40, Public Sector
Combinations, issued in January 2017. An entity shall apply these amendments for annual financial
statements covering periods beginning on or after January 1, 2019. Earlier application is encouraged.
If an entity applies the amendments for a period beginning before January 1, 2019 it shall disclose
that fact and apply IPSAS 40 at the same time.
101F. Paragraphs 76 and 97 were amended by Improvements to IPSAS, 2018, issued in October 2018. An
entity shall apply these amendments for annual financial statements covering periods beginning on
or after January 1, 2019. Earlier application is permitted.
101G. Paragraphs 66 and 68 were amended, and paragraphs 100B–100D added, by Improvements to IPSAS,
2018, issued in October 2018. An entity shall apply these amendments for annual financial statements
covering periods beginning on or after January 1, 2019. Earlier application is permitted. If an entity
applies this amendment for a period beginning before January 1, 2019, it shall disclose that fact.

433 IPSAS 16
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101H. IPSAS 43 issued in January 2022, amended the scope of IPSAS 16 by defining investment property
to include both owned investment property and property held by a lessee as a right-of-use asset.
Paragraphs 7, 10, 12, 13, 20, 26, 27, 39, 49, 50, 59, 62, 62A, 63, 65, 71, 72, 73, 78, 80, 85, 86, 88, and 89
were amended, paragraphs 25A, 38A, 41A, 41B, 41C, 49A and 100A and its related heading were
added, and paragraphs 5, 8, 34, 35 and 43 were deleted by IPSAS 43. An entity shall apply these
amendments for annual financial statements covering periods beginning on or after January 1, 2025.
Earlier application is permitted. If an entity applies the amendments for a period beginning before
January 1, 2025, it shall disclose that fact and apply IPSAS 43 at the same time.
101I. Paragraphs 65, 87 and 90 were amended by IPSAS 44 issued in May 2022. An entity shall apply these
amendments for annual financial statements covering periods beginning on or after January 1, 2025.
Earlier application is permitted. If an entity applies the amendments for a period beginning before
January 1, 2025, it shall disclose that fact and apply IPSAS 44 at the same time.
101J. Paragraphs 6, 10, 13, 19, 33, 39, 62, 62A, 63, 65, 71-73, and 89 were amended by IPSAS 45 issued in
May 2023. An entity shall apply these amendments for annual financial statements covering periods
beginning on or after January 1, 2025. Earlier application is encouraged. If an entity applies these
amendments for a period beginning before January 1, 2025, it shall disclose that fact and apply
IPSAS 45 at the same time.
101K. Paragraphs 33, 38, 39, 40, 41, 41A, 41C, 42, 49, 49A, 50, 57, 59, 62, 62A, 62B, 63, 65, 70, 79, 86, 87, 89,
90 and 97 and the related headings of paragraphs 42, 62, 65, 86, 87, 89A, 90, 97 and 100 were amended,
paragraphs 89A–89F were added, and paragraphs 45–48, 51–56, 58, 60, and 86(d) were deleted by
IPSAS 46, issued in May 2023. An entity shall apply these amendments for annual financial
statements covering periods beginning on or after January 1, 2025. Earlier application is encouraged.
If an entity applies the amendment for a period beginning before January 1, 2025, it shall disclose
that fact and apply IPSAS 46 at the same time.
101L. Paragraphs 13, 78, and 81 were amended by IPSAS 47, issued in May 2023. An entity shall apply these
amendments for annual financial statements covering periods beginning on or after January 1, 2026.
Earlier application is encouraged. If an entity applies the amendments for a period beginning before
January 1, 2026, it shall disclose that fact and apply IPSAS 47 at the same time.
102. When an entity adopts the accrual basis IPSAS of accounting as defined in IPSAS 33, First-time Adoption of
Accrual Basis International Public Sector Accounting Standards (IPSAS) for financial reporting purposes
subsequent to this effective date, this Standard applies to the entity’s annual financial statements covering
periods beginning on or after the date of adoption of IPSAS.

Withdrawal of IPSAS 16 (2001)

103. This Standard supersedes IPSAS 16, Investment Property, issued in 2001.

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 INVESTMENT PROPERTY

Basis for Conclusions

This Basis for Conclusions accompanies, but is not part of, IPSAS 16.

Revision of IPSAS 16 as a result of the IASB’s General Improvements Project 2003

Background
BC1. The IPSASB’s IFRS Convergence Program is an important element in the IPSASB’s work program. The
IPSASB policy is to converge the accrual basis IPSAS with IFRS issued by the IASB where appropriate for
public sector entities.
BC2. Accrual basis IPSAS that are converged with IFRS maintain the requirements, structure, and text of the IFRS,
unless there is a public sector-specific reason for a departure. Departure from the equivalent IFRS occurs
when requirements or terminology in the IFRS are not appropriate for the public sector, or when inclusion of
additional commentary or examples is necessary to illustrate certain requirements in the public sector
context. Differences between IPSAS and their equivalent IFRS are identified in the Comparison with IFRS
included in each IPSAS.
BC3. In May 2002, the IASB issued an exposure draft of proposed amendments to 13 International Accounting
Standards (IAS)1 as part of its General Improvements Project. The objectives of the IASB’s General
Improvements Project were “to reduce or eliminate alternatives, redundancies and conflicts within the
Standards, to deal with some convergence issues and to make other improvements.” The final IAS were
issued in December 2003.
BC4. IPSAS 16, issued in December 2001, was based on IAS 40 (2000), Investment Property, which was reissued
in December 2003. In late 2003, the IPSASB’s predecessor, the Public Sector Committee (PSC),2 actioned
an IPSAS improvements project to converge, where appropriate, IPSAS with the improved IAS issued in
December 2003.
BC5. The IPSASB reviewed the improved IAS 40 and generally concurred with the IASB’s reasons for revising the
IAS and with the amendments made. (The IASB’s Bases for Conclusions are not reproduced here.
Subscribers to the IASB’s Comprehensive Subscription Service can view the Bases for Conclusions on the
IASB’s website at http://www.iasb.org). In those cases where the IPSAS departs from its related IAS, the
Basis for Conclusions explains the public sector-specific reasons for the departure.
BC6. IAS 40 has been further amended as a consequence of IFRS issued after December 2003. IPSAS 16 does
not include the consequential amendments arising from IFRS issued after December 2003. This is because
the IPSASB has not yet reviewed and formed a view on the applicability of the requirements in those IFRS
to public sector entities.

Revision of IPSAS 16 as a result of the IASB’s Improvements to IFRS issued in 2008

BC7. The IPSASB reviewed the revisions to IAS 40 included in the Improvements to IFRS issued by the IASB in
May 2008 and generally concurred with the IASB’s reasons for revising the standard. The IPSASB concluded
that there was no public sector specific reason for not adopting the amendments.

1
The International Accounting Standards (IAS) were issued by the IASB’s predecessor, the International Accounting Standards Committee. The
Standards issued by the IASB are entitled International Financial Reporting Standards (IFRS). The IASB has defined IFRS to consist of IFRS,
IAS, and Interpretations of the Standards. In some cases, the IASB has amended, rather than replaced, the IAS, in which case the old IAS
number remains.
2
The PSC became the IPSASB when the IFAC Board changed the PSC’s mandate to become an independent standard-setting board in
November 2004.

435 IPSAS 16 BASIS FOR CONCLUSIONS

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Revision of IPSAS 16 as a result of the IPSASB’s The Applicability of IPSAS, issued in April 2016
BC8. The IPSASB issued The Applicability of IPSAS in April 2016. This pronouncement amends references in all
IPSAS as follows:
(a) Removes the standard paragraphs about The Applicability of IPSAS to “public sector entities other
than GBEs” from the scope section of each Standard;
(b) Replaces the term “GBE” with the term “commercial public sector entities”, where appropriate; and
(c) Amends paragraph 10 of the Preface to International Public Sector Accounting Standards by providing
a positive description of public sector entities for which IPSAS are designed.
The reasons for these changes are set out in the Basis for Conclusions to IPSAS 1.

Revision of IPSAS 16 as a result of Improvements to IPSAS, 2018

BC9. Paragraph 76 included requirements regarding the measurement of self-constructed investment property that
will be carried at fair value following its transfer from another class of asset once an entity completed its
construction or development. As a result of the amendments made by Improvements to IPSAS issued in
January 2010, investment property under construction is now within the scope of IPSAS 16, and fair value
measurement may commence during construction. Consequently, the IPSASB decided to amend paragraph
76.
BC10. Paragraph 97 includes transitional provisions for those entities that elect, for the first time, to classify and
account for some or all eligible property interests held under operating leases as investment property. These
provisions have been restated following the deletion of other transitional provisions (to which paragraph 97
previously referred) as a result of the issuance of IPSAS 33, First-time Adoption of Accrual Basis International
Public Sector Accounting Standards (IPSAS).
BC11. The IPSASB reviewed the revisions to IAS 40 included in the narrow scope amendments titled Transfers of
Investment Property (Amendments to IAS 40) issued by the IASB in December 2016, and the IASB’s
rationale for making these amendments as set out in its Basis for Conclusions, and generally concurred that
there was no public sector specific reason for not adopting the amendments.

Revision of IPSAS 16 as a result of IPSAS 46, Measurement

BC12. IPSAS 46, Measurement, issued in May 2023, provides generic guidance on the initial and subsequent
measurement of assets, to ensure a consistent approach across all IPSAS. The IPSASB agreed to update
measurement terminology and disclosure requirements for consistency with IPSAS 46, remove guidance on
measurement in IPSAS 16 where such guidance was now provided in IPSAS 46, and to refer preparers to
the guidance in that Standard.

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 INVESTMENT PROPERTY

Illustrative Decision Trees

These decision trees accompany, but are not part of, IPSAS 16.

437 IPSAS 16 ILLUSTRATIVE DECISION TREES

 INVESTMENT PROPERTY

IPSAS 16 ILLUSTRATIVE DECISION TREES 438

 INVESTMENT PROPERTY

COMPARISON WITH IAS 40

IPSAS 16 is drawn primarily from IAS 40 (2003), Investment Property and includes amendments made to IAS 40 as part
of the Improvements to IFRS issued in May 2008. At the time of initially issuing this Standard, the IPSASB had not
considered the applicability of IFRS 4, Insurance Contracts, and IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations, to public sector entities; therefore IPSAS 16 did not reflect amendments made to IAS 40
consequent upon the issue of those IFRS. The IPSASB has subsequently issued IPSAS 44, Non-current Assets Held for
sale and Discontinued Operations in May 2022. Therefore, all amendments made to IAS 40 from the issuance of IFRS 5
are now reflected in IPSAS 16. The main differences between IPSAS 16 and IAS 40 are as follows:
• IPSAS 16 requires that investment property initially be measured at cost and specifies that where an asset is
acquired for no cost or for a nominal cost, its cost is its fair value as at the date of acquisition. IAS 40 requires
investment property to be initially measured at cost.
• There is additional commentary to make clear that IPSAS 16 does not apply to property held to deliver a social
service that also generates cash inflows. Such property is accounted for in accordance with IPSAS 45, Property,
Plant, and Equipment.
• IPSAS 16 uses different terminology, in certain instances, from IAS 40. The most significant example is the use of
the term “statement of financial performance” in IPSAS 16. The equivalent term in IAS 40 is “income statement.”
• IPSAS 16 does not use the term “income,” which in IAS 40 has a broader meaning than the term “revenue.”

439 IPSAS 16 COMPARISON WITH IAS 40