MEANING OF INVESTMENT PROPERTY
- Investment in land or buildings held for earning rentals or capital appreciations are called investment properties
- Investment properties are classified as long term investments
TREATMENT OF INVESTMENT PROPERTY
- Since Investment properties are classified as Long Term Investments, they are to be valued at cost.
- Therefore, we may assume that depreciation should not be provided on Investment properties.
- However, if there is a decline in the value of Long term investment, and if such decline is “Non-temporary”, then recognize the decline.
- Therefore, depreciation should be compulsorily provided on “Investment Properties” as depreciation is not a temporary decline.