Investment properties. The Board decided that real estate entities that are wholly owned by only one investor would not consider the unit ownership and pooling of funds criteria for determining an investment property entity. The exemption only applies if the investor accounts for its investments at fair value pursuant to a requirement or an option under U.S. GAAP.



This is the FASB story so far:


FASB: Financial Accounting Standards Board

Investment Properties

Last updated on February 16, 2011.  Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective
*Decisions Reached at Last Meeting
*Summary of Decisions Reached to Date
Next Steps
*Board/Other Public Meeting Dates
Background Information
*Contact Information

Project Objective

The objective of this project is to consider whether entities should be given the option (or be required) to measure an investment property at fair value through earnings. The existing international accounting standard (IAS 40, Investment Property) provides such an option. This project also will consider how an entity should consider a lease when measuring the fair value of a leased investment property.

As part of this project, the Board also may address related issues that are within the scope of Emerging Issues Task Force (EITF) Issue No. 09-D, “Application of Topic 946, Financial Services—Investment Companies, by Real Estate Investment Companies.”

*Decisions Reached at Last Meeting (February 9, 2011)

The Board reaffirmed its previous decision that the investment properties guidance would only apply to entities that meet the five criteria the Board has previously developed. The Board decided that the business activities and business purpose criteria should describe the qualifying entities as those that invest in real estate for total return. The revised criteria follow:
  1. Business Activities. The entity’s substantive activities relate to investing in real estate.
  2. Business Purpose. The express business purpose of the entity is to invest in real estate for total return including an objective to realize capital appreciation. The entity has potential strategies for realizing capital appreciation including selling a property to maximize its total return. The entity’s business purpose is not to hold real estate properties for:
    1. Use in the production or supply of goods or services or for administrative purposes;
    2. Rental income only; or
    3. Sale in the ordinary course of business.
  3. Unit Ownership. Ownership in the entity is represented by units of investments, such as shares or partnership interests, to which proportionate shares of net assets can be attributed.
  4. Pooling of Funds. The entity has one or more unrelated investors that hold significant ownership interests in the entity.
  5. Reporting Entity. The entity can be but does not need to be a legal entity.
The Board decided to allow an entity with investments in both property and other types of real estate investments (such as mortgage receivables or mortgage-back securities) to qualify under the investment properties guidance. The Board will continue to discuss whether certain real estate entities owned by a single owner (for example, a pension plan) would qualify under the investment properties guidance.

*Summary of Decisions Reached to Date

Summary of Decisions Reached to Date 

Next Steps

The Board directed the staff to draft a proposed Update. Please refer to the Current Technical Plan for information about the expected release date of the exposure document.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

*February 9, 2011 Board Meeting—Additional scope considerations
December 1, 2010 Board Meeting—Additional scope considerations
November 10, 2010 Board Meeting—Scope
August 31, 2010 Board Meeting—August deliberations
July 14, 2010 Board Meeting—July deliberations

March 10, 2010

Board Meeting—Agenda Decision

Background Information

At the January 20, 2010 joint Board meeting, the FASB and the IASB tentatively decided that a lessor of investment properties would be required to apply the proposed new lessor accounting requirements if the lessor measures its investment properties at cost. The IASB tentatively decided that if a lessor of investment properties measures its investment properties at fair value in accordance with IAS 40, it would not apply the proposed new lessor accounting requirements to the lease; instead, it would continue to account for those leases as operating leases, as specified in IAS 17, Leases.Because U.S. generally accepted accounting principles (GAAP) do not provide an option to measure investment properties at fair value, the FASB added this project on March 10, 2010 to decide whether to permit or require investment properties to be carried at fair value.

*Contact Information 

Kim Yang
Industry Fellow

Brian Monsen
Postgraduate Technical Assistant

Nicole Axt
Postgraduate Technical Assistant



Views: 32

Reply to This

Drive more Business with our Custom Feeds

myCREOpoint™ allows you to offer a custom stream of curated content to your website, social media and other audiences for less than the cost of a temp and with no IT development cost or delay.


Our custom feeds provide only the most relevant content sliced by topic or combined in any way you want (e.g., your brands or event sponsors like here).


Email us today to arrange a demonstration.



© 2017   Created by CREOpoint.   Powered by

Badges  |  Report an Issue  |  Terms of Service