ACCOUNTING AND ANALYSIS OF INVESTMENT PROPERTY - METHODOLOGY AND METHODS

Abstract

The issue of investment property owned by the enterprise is relevant at all stages of its development.
Investment property can be land or a building, or parts of a building, or both, which are held by the owners rather to generate rental income, increase current period profit, and thereby the equity value of the enterprise. The owners do not hold the investment property to be used in the production or supply of goods and/or services, or for administrative purposes, or for sale in the ordinary course of business. Real estates (land and/or a building) are sated as investment property due to their specific purpose in their use. The enterprise should prepare and disclose an estimate about the circumstances that objectively allow to classify a property as investment property. It should develop and adopt criteria allowing it to make estimates in time based on the indicated of the accounting regulations – national or international accounting standards. For the purposes of the true and fair presentation of income, costs, financial performance, financial position, financial stability, cash flows and business efficiency, such criteria should be disclosed.
Investment properties generate economic benefits that are different and independent from the economic benefits that the enterprise expects to receive from the other assets it owns and controls. The article examines the circumstances that require the company's long-term tangible assets (land and/or buildings) to be reported as investment properties in its financial statements. The leading criterion here is the specific use by the enterprise of the investment properties it owns. In order to be recognized, valued and presented in the financial statement as an investment property, a given land or building must be able to generate independent inflows of cash that are different from the inflows of cash achieved by the other assets of the enterprise.
The article examines the criteria for recognizing investment properties, their initial valuation, the subsequent costs associated with them, as well as their subsequent valuation. The subject of the research are the main business operations related to the investment properties of the enterprises, which should find accounting coverage. The requirements for disclosure of information about investment properties in the financial statements of enterprises are derived. The purpose of the article is to propose a methodology for the analysis of the investment properties of enterprises, based on the information presented in the financial statements.