Both standards of IAS 16 and IAS 40 are very similar in nature and share certain common guidelines as well. However, it should be noted that the differences between IAS 16 and IAS 40 will be affecting the company’s performance reporting. To determine the application of respective standards, depending on the nature, business model, and usage of the non-current asset. The reporting entities are required to comply with IAS40/MFRS 140 in relates to the accounting treatment of investment property upon the determination and classification of property. The wonderful company owns land which has yet to decide on the development of the land. The land was purchased for RM30 million on 1 January 2019 and had a market value of RM48 million on 31 March 2020. The management wishes to measure the land at fair value where this is allowed by accounting standards. The company has 31 December of the financial year ends. Although the disclosure of the fair value of investment properties enhances the ability of investors to compare this entity with entities that use the fair value model, it should be noted that the fair value of the investment properties has been estimated using a judgmental methodology and without the use of an independent expert-this may mean that the valuation is more susceptible to bias and manipulation.

QUESTION

Propose recommendation to Wonderful for the accounting treatment of the land with the relevant accounting standards.