INVESTMENT PROPERTY – THE COST-BASED MODEL OR THE FAIR VALUE MODEL. WHAT DO WE CHOOSE?

Abstract

The current accounting rules governing investment property issues allow economic entities that own such assets to exercise their right of option through professional judgment for several models that allow for the subsequent evaluation of these balance sheet structures. Our study aims to analyze these valuation models and present the effects generated by the option for one or another of them. The analysis is carried out by referring to relevant opinions expressed in the specialized literature on this subject. The research results indicated that the option for one of the two models is not well defined, the factors that influence this option are diverse, and the advantages and disadvantages of applying one of the models can be interpreted differently depending on the objectives pursued by the entity.

Keywords

• investment property
• cost-based model
• fair value-based model
• ias 40
• option
• impact.