04-23-2010, 08:12 AM
A company has joint ownership of a building whose primary purpose is to earn rentals by renting out floor space.
The initial amount invested by the company is Rs.270 (30%) out of a total investment of Rs.900 ( in which Rs.630 is initial investment by other co-owners).
The company has the right to share in profits (excess of rentals over maintenance expenses) in the ratio of its investment i.e 30% of any profits earned by the building.
The company does not have any title to any specific floor,area,land of the building....only 30% share in total ownership..
How should this be accounted for??
1. As investment property under IAS-40?
2.Simple investment (falling in one of 4 categories under IAS-39)??