Investment property and efficient market hypothesis AASB 140/IAS 40 Investment Property permits preparers to choose either the
Question:
Investment property and efficient market hypothesis
AASB 140/IAS 40 Investment Property permits preparers to choose either the cost model or fair value model for measurement of investment property after initial recognition. If the fair value model is adopted, changes in the fair value of investment property are recognised in profit or loss. If the cost model is chosen, paragraph 79(e) requires disclosure of the fair value of investment property.
If the efficient market hypothesis is correct, management would be indifferent between adopting the fair value model for the measurement of investment property recognised in the statement of financial position and adopting the cost model and disclosing the fair value of investment property in the notes.
Required
Critically evaluate this statement.
Step by Step Answer:
Financial Reporting
ISBN: 9780730396413
4th Edition
Authors: Janice Loftus, Ken Leo, Sorin Daniliuc, Belinda Luke, Hong Nee Ang, Mike Bradbury, Dean Hanlon, Noel Boys, Karyn Byrnes