Investment property is de-recognised when it has been disposed of or when it has been permanently withdrawn from use and no future economic benefits are expected to arise from its disposal.

Disposal could occur through sale, in which case the date of disposal is determined using the principles in IFRS 15 (IAS 18), or by entering into a finance lease or sale and leaseback, in which case the date of disposal is determined by applying IFRS 16.

The gain or loss included in the income statement is disclosed separately for a property that has been carried using the cost model, because of difficulty in obtaining a reliable fair value for it continuously, where otherwise the entity’s normal policy is to use the fair value model.

The gain or loss on disposal or retirement of investment property is calculated as the difference between the net disposal proceeds (after deducting direct disposal costs) and the carrying amount (whether on the cost or fair value model) at the date of disposal. The gain or loss is recognised in the income statement unless IFRS 16 requires otherwise in a sale and leaseback.

IAS 1 separate disclosures The nature and amount of material items of income or expense should be disclosed separately. Disposals of plant, property and equipment and disposals of investments are examples of where the income or expense could be material. Gains and losses on disposals of investment property should be disclosed separately in the income statement if they are material, with further analysis being given of the gain or loss on the specific type of property.

Deferred consideration is receivable for the sale of an investment property is discounted to present value to arrive at the cash price equivalent, which is the proceeds of the sale. The difference between this amount and the amount receivable is treated as interest income and recognised over the period until the actual receipt using the effective interest method.

An entity applies IAS 37 to the recognition, measurement and disclosure of liabilities or contingent liabilities retained after disposal. Examples of such a contingent liability might be an agreement to compensate a purchaser for any tax liability that might arise, to make good any potential liability for environmental damage, or to make good any default in rentals payable by tenants. Liabilities and contingent liabilities are also considered when determining whether or not the vendor has disposed of substantially all the risks and rewards of ownership of the property and thus a sale has occurred.