IAS 40 Cost model with annual impairment

[MrLoris]

Hello,

I have stumbled upon an entity which applies the cost model for its Investment Property rental and depreciates it accordingly, however they also conduct an annual impairment test and recognize the loss or gain in the income statement.
As far as the standard goes, I believe they should either depreciate it using the cost model or use the fair value model and perform the impairment. I am not convinced the entity performs it the right way, can you please guide me?

[JRSB]

if you hold at cost you need to disclose the fair value anyway, so it'll be clear if that is lower than carrying value.

also, the scope of IAS 36 includes investment property held at cost as only FV model Investment property is scoped out

[MrLoris]

Thank you for your reply! I understand that FV should be disclosed, however I am not sure if the entity should impact its P&L twice, once with depreciation and again with an impairment. If the entity performs an annual impairment, shouldn't they switch to a FV model rather than continue depreciating? I am not entirely sure here.

[Marek Muc]

Their approach is correct. Read more about impairment at https://ifrscommunity.com/knowledge-bas ... al-assets/