IAS 40 · Free study guide

    IAS 40: Investment Property

    IAS 40 covers property held to earn rental income or for capital appreciation, distinct from owner-occupied property under IAS 16. Its choice between the fair value model and the cost model — and the specific rules for transfers between investment property and other categories — is a frequent source of exam confusion for students who assume the two standards work identically.

    It's usually taught as a companion standard to IAS 16, and it appears throughout financial reporting syllabi across professional qualifications, staying practically relevant for real estate, REITs, and any company holding rental property as an investment rather than for operational use.

    AccountingTutorAI's IAS 40 coverage includes an AI tutor, exam-style practice questions on classification and measurement scenarios, and an interactive decision tree for distinguishing investment property from owner-occupied assets. Sign up free to get started.

    Study IAS 40 with an AI tutor

    AI-tutored explanations, exam-style practice questions, and interactive decision trees. Free to start.

    Start free

    Frequently asked questions

    How is investment property different from IAS 16 property?

    Investment property is held for rental income or capital appreciation, not for use in the business — the distinction drives which standard applies.

    What's the fair value vs cost model choice under IAS 40?

    Companies can measure investment property at fair value (with changes through profit or loss) or at cost less depreciation — the standard requires disclosure either way, but the accounting differs significantly.

    Is IAS 40 commonly tested with IAS 16?

    Yes — questions often test whether students can correctly classify a property as investment property versus owner-occupied, then apply the right standard.

    Other standard guides