DOI: 10.5176/2251-1997_AF-56

Authors: Dr. Alain Devalle and Dr. Fabio Rizzato


The paper presents the results of an empirical analysison the accounting and on the disclosure of investment propertiesin consolidated financial statements under IFRS.

The first aim of the paper is to verify the accounting method ofinvestment properties. In fact IFRS permit to choose between thefair value model and the cost model (IAS 40 Par. 30). We expectthat only companies in the real estate sector or companies listedin the UK would use the fair value as a subsequent measurement.

Secondly, depending on the accounting method chosen,companies must disclose different information as defined by IAS40 par. 74-79. This paper analyse the information required byIAS 40 and disclosed by companies. We expect that companiesare in compliance with the information required but we alsoexpect differences depending on the market analysed.

Consequently, an empirical analysis was carried out of theconsolidated financial statements of the groups listed on theItalian, French, German, Spanish and UK Stock Exchanges andbelonging to the main indexes of the above-mentioned markets(FTSEMIB40, CAC40, DAX30, IBEX35, FTSE100). The sampleis made up of 248 consolidated financial statements referring tothe year 2009.

The results show that the use of fair value is rarely widespread inthe sample examined even if it can be stated that there aredifferences depending on the country analysed.

Moreover, the results show that surprisingly most of thedisclosure of IAS 40 in the notes of financial statement are notcompliant with par. 74-79 and there are wide differences betweenthe market analysed.

A question arise from the evidence: why companies do not reportall information in the financial statement notes? Standard setters,practitioners and academics must deal with this topic.

Keywords: fair value, investment property, costmodel, IFRS, disclosure

LinkOut:    University of Turin

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