362 / 488
Chapter 3ll1llvestment Property (lAS 40)
351
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
At star!of year
Additions
At end of year
Depreciation
At start of year
Depreciation charge
At end of year
Net book value
2006
Em
38.6
38.6
0.1
0. 1
38.5
2005
Em
37.8
0.8
38.6
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.