08-20-2009, 04:35 AM
Dear,
The followings are the respective responses to your queries.
<b>Query-1</b>
In such a case, property should be treated as Inventory under IAS 2.
The said land may not be treated as Investment Property under IAS 40 since the aforesaid case does not qualify as Investment Property as defined in IAS 40, Defination specifically refrains to recognize those properties as Investment properties, which are to be used for production or supply of goods and services or for sale in the ordinary course of business.
In this case, land is being held in the ordinary course of company's business. so does not come under the ambit of Investment Properties.
In this particular case, Land may also not be treated as a "Non Current Asset Held For Sale" as per IFRS 5, since it is contrary to the "2.1 of IFRS 5", which reveals (Partly being quoted) "The asset must be available for immediate sale in its present condition and its sale must be highly probable", since asset is neither available for immediate sale nor (will be available) in the same condition.
<b>Query-2</b>
A - The functional currency of the entity is rupees, however, as per point number 6.1 of IAS 21, which reveals that, " An entity can present its financial statements in any currency.If the presentation currency is different from the functional currency, the financial statements are retranslated into presentation currency".
In the light of the above, Rupees is not mandatory currency for presentation.
B - When the presentation currency of the entity is different from functional currency then the fact is required to be disclosed forthwith mentioning its functional currency, furthermore, reasons for using different presentation currency to that of its functional currency is also required to be disclosed.
Queries will be appreciated, however not guaranteed to be responded timely.
Best Regards,
Faisal
The followings are the respective responses to your queries.
<b>Query-1</b>
In such a case, property should be treated as Inventory under IAS 2.
The said land may not be treated as Investment Property under IAS 40 since the aforesaid case does not qualify as Investment Property as defined in IAS 40, Defination specifically refrains to recognize those properties as Investment properties, which are to be used for production or supply of goods and services or for sale in the ordinary course of business.
In this case, land is being held in the ordinary course of company's business. so does not come under the ambit of Investment Properties.
In this particular case, Land may also not be treated as a "Non Current Asset Held For Sale" as per IFRS 5, since it is contrary to the "2.1 of IFRS 5", which reveals (Partly being quoted) "The asset must be available for immediate sale in its present condition and its sale must be highly probable", since asset is neither available for immediate sale nor (will be available) in the same condition.
<b>Query-2</b>
A - The functional currency of the entity is rupees, however, as per point number 6.1 of IAS 21, which reveals that, " An entity can present its financial statements in any currency.If the presentation currency is different from the functional currency, the financial statements are retranslated into presentation currency".
In the light of the above, Rupees is not mandatory currency for presentation.
B - When the presentation currency of the entity is different from functional currency then the fact is required to be disclosed forthwith mentioning its functional currency, furthermore, reasons for using different presentation currency to that of its functional currency is also required to be disclosed.
Queries will be appreciated, however not guaranteed to be responded timely.
Best Regards,
Faisal
