Question

outline the key message of the international accounting standard IAS 16 and evaluate why you think investment properties should be treated differently from other properties outlined under IAS 16

Answer 1

AS (Accounting standard) 16 is accounting for borrow costs.

Borrowing costs:- borrowing costs are interest and other cost incurred by an enterprise in connection with the borrowing funds.

Qualifying assets :- an assets that necessarily takes a substantial period of time to get ready for its intended use or sale.

Example :- qualifying assets are manufacturing plant, power, inventories that want substantial time to bring them to a stable condition.

Capitalization of borrowing cost:-that borrowing cost thai is directly mentioned to something that you bought, or making something are eligible for capitalization. If the expenditure of Quilyifing assets are not made it would be avoided.

There are two types of borrowing

1.specific borrowing

2.general borrowing

Why we think investment properties should be treated different from other properties :- because investment properties are organise to earn rentals or capital appreciation in long terms . And other properties are (property, plant, and equipment) held to use entity business activities.