investment properties

Properties owned by a company that holds investments as part of its business, such as an investment trust or a property-investment company. Investment properties may also include properties owned by a company whose main business is not the holding of investments. Such properties are strictly defined by Statement of Standard Accounting Practice 19, Accounting for Investment Properties, as being an interest in land and/or buildings:

(1) in respect of which construction work and development have been completed; and

(2) that is held for its investment potential, any rental income being negotiated at arm's length.

However, a property owned and occupied by a company for its own purposes is not an investment property, and a property let to and occupied by another company in the same group is not an investment property for the purposes of its own accounts or the group accounts. Investment properties should not be depreciated annually unless they are held on a lease. If they are leased they should be depreciated on the basis set out in Statement of Standard Accounting Practice 12, Accounting for Depreciation, at least over the period, when the unexpired term is 20 years or less. Investment properties should be included in the balance sheet at their open-market value, movements being taken to the investment revaluation reserve unless it is insufficient to cover a deficit, in which case it should be taken to the profit and loss account