Inventory writedown in real estate3/19/2023 The objective of IAS 2 and the nature of costs incurredĢ.1 The objective of IAS 2 is to prescribe the accounting treatment for inventories. ġ.5 The term 'affordable housing' is used in this article to mean housing that a developer is required to construct as a condition of being granted development permission and is expected to be sold for less than the cost to construct to customers identified by the government (often the authority that granted permission). ![]() That is, public infrastructure is infrastructure that does not need to be completed before the premium housing could function as intended and be sold. For illustrative purposes and ease of discussion, this article refers to the development of 'premium housing'.ġ.4 This article uses the term 'public infrastructure’' to mean infrastructure that could be constructed independently of the premium housing and will be controlled by government for the benefit of the public, which is a wider group than the developers' customers. This article explores the manner in which property developers’' inventories are costed under IAS 2 when, as a condition of being granted development permission, developers are required to construct public infrastructure and/or affordable housing.ġ.3 Property developments typically involve constructing housing, retail, office and/or industrial property for sale to customers with a view to profit. However, its fundamental requirements have remained substantially unchanged.ġ.2 Despite its requirements rarely being in the spotlight, issues occasionally arise about how IAS 2 should be applied in particular circumstances. Backgroundġ.1 IAS 2 was first issued in 1975 and has been revised on a number of occasions*. IAS 2 Inventories IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 16 Property, Plant and Equipment IAS 37 Provisions, Contingent Liabilities and Contingent Assets IFRS 15 Revenue from Contracts with Customers and the Conceptual Framework for Financial Reporting. ![]() Inventory inventory costing IAS 2 Inventories, property development public infrastructure affordable housing and incurred in bringing the inventories to their present location and condition. An introduction to professional insights.Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner.
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