IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

351

Chapter 3ll1llvestment Property (lAS 40)

of property, plant , and equipment carried under the cost model whe rein that standa rd does not make it mandatory but "encourages" the entity to disclose the fair value of such a property, plant , and equipment only in a situa tion when the fa ir value is materially different from the as– set's carrying value. In prac tice , undertaking a fair valua tion of an investment property on an annual basis, usually by an independent expert, is a very expensive exercise and thus entities are seen to prefer using the cos t model over the fair value model. But if the standard makes it a compulsory require– ment that an entity also disclose the fair value in a case where in it measures the investment property using the cos t model, such a disclosure requi rement , in a way , amounts to takin g away the free choice of allowi ng an entity to use either the cost model or the fair va lue model. In practice, therefore, such a mandat ory disclosure requirement is construed by some as the pro– verbial case of the fine print taking away what the large print apparently allowed.

8. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS MARKS AND SPENCER GROUP pic Notes to the Financial Statements 15. Investment Property

2006 Em 38.6

2005 Em 37.8 0.8 38.6

At star!of year Additions At end of year Depreciation At start of year Depreciation charge

38.6

0.1

At end of year Net book value

0. 1 38.5

38.6 The investment properties were valued at £55.5m (last year £42.6m) as at I April 2006 by qualified professional valuers working for DTZ Debenham Tie Leung, Chartered Surveyors , acting in the capacity of External Valuers. All such valuers are Chartered Surveyors, being membe rs of the Royallnsitution of Chartered Surveyors (RICS). The properties were valued on the basis of Market Value. All valuations were carried uut in accordance with the RICS Appraisal and Valuation Standards. As the investment properties are held at depreciated historical cost, this valuation has not been reflected in the carryi ng value of the assets. The Group recei ved rental income of £ 1.5m (last year £ IAm) in respect of these in– vestment properties.