Under international financial reporting standards, investment property is property that an entity holds to earn rental income and/or capital appreciation. It generates cash flows mostly independently of other assets held by an entity. It is not property that an entity uses to supply goods or services, nor is it used for administrative purposes. Examples of investment property are land held for appreciation and a building held for current or future leases to third parties. Examples of assets that are not investment property are property intended for sale in thenear term, property being constructed for a third party, owner-occupied property, and property leased to a third party under a finance lease.
If an investment property contains one portion held for either rental income or capital appreciation, and another portion held for other uses, and if the portions could be sold separately, then account for them separately. If it is not possible to do so, then account for the property as an investment only if the portion held for other uses is an insignificant amount of the total asset value.
If an entity provides services to the occupants of a property, it can account for the property as an investment property only if the services it provides are insignificant.
Property held by a lessee under an operating lease may be investment property if it otherwise meets the definition of investment property and the lessee recognizes it under the fair value model. If a lessee classifies such a property as an investment property, then it must account for all of its investment property using the fair value model.