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PAS 40 Multiple Choice Questions on Investment Property
Course: Basic Accounting (BA101)
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University: Notre Dame University
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1. A property that is held by a lessee, under an operating lease, may be held as an
investment property, but only if:
A. The operating lease exceeds 20 years.
B. It is a hotel.
C. The lessee uses the fair value model.
D. None of the above.
2. Which of the following does not define investment property?
A. Property held to earn rentals.
B. Property held for capital appreciation.
C. Property used in the production or supply of goods or services.
D. A and C.
3. Which of the following statements is true with regards to an investment property?
A. An investment property generates cash flows largely independently of the
other assets held by an entity.
B. The value in use of investment property is significantly higher than of owner-
occupied property.
C. An investment property unlike owner-occupied property shall not be
depreciated over its useful life.
D. An investment property unlike owner-occupied property shall always be
measured at its historical cost.
4. An investment property shall be measured initially at its __________.
A. Cost
B. Fair value
C. Deemed cost
D. Value in use
5. If property held under an operating lease is classified as investment property:
A. All investment property will be accounted for using the fair value model.
B. Depreciation will no longer be charged.
C. All property held under operating leases are classified as investment
properties.
D. None of the above.
6. If a property is partly an investment property, and partly owner-occupied, the
company should account for the property:
A. As owner-occupied.
B. Each portion should be accounted for separately.
C. As investment property.
D. As inventory.
7. If a firm provides significant ancillary services to tenants in its property:
A. The service fees should be capitalized.
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