No doubt you\u2019ve heard the term \u201cinvestment property\u201d being mentioned or seen such line items on balance sheet\u2019s of other companies. But what is investment property? Should you have investment property on your balance sheet?<\/p>\n
In a nutshell an investment property is property you\u2019re not using in your own business, that\u2019s for one. You\u2019re not using it for your own production, office or whatever similar activities, but rather for renting it out or you\u2019re holding it for future profits (gain in fair value of the property).\u00a0<\/p>\n
If this \u201cproperty\u201d is partly used for one purpose, i.e. you use it for your own office or production and the other you rent out, you should show part as your property, plant and equipment and part as investment property.<\/p>\n
It\u2019s not so much as a different accounting method or classification \u2013 they are both still non-current assets and depending on your accounting framework the accounting treatment may very well also be the same, but just reflecting your assets correctly. By definition PPE is what you use in your business \u2013 they are the ones helping you in generating operating profits, but investment property is what helps you in getting non-operating results and aren\u2019t this predictable if you think about the concept. One is stable business and the other rather one-off.<\/p>\n","protected":false},"excerpt":{"rendered":"
No doubt you\u2019ve heard the term \u201cinvestment property\u201d being mentioned or seen such line items on balance sheet\u2019s of other companies. But what is investment property? Should you have investment property on your balance sheet? In a nutshell an investment property is property you\u2019re not using in your own business, that\u2019s for one. You\u2019re not […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,96],"tags":[],"class_list":["post-4647","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-21-investment-property"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4647"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4647\/revisions"}],"predecessor-version":[{"id":4648,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4647\/revisions\/4648"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4647"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}