Accounting for investment properties prior to the introduction of FRS 102 was probably a minority sport.

Many companies and groups that don’t’ specialize in renting properties can often have periods when some of their properties are rented out or held for capital appreciation (e.g. construction companies with property stocks that they cannot readily sell). Otherwise these properties would have been dealt with as stocks and work in progress. Because of the recent recession and the fact that some such properties are let out to generate much needed rental income, these properties may now qualify as ‘investment properties’. There are some differences between the old SSAP 19 and FRS 102.

The change in definition of an investment property (dealt with in Section 16 of FRS 102) means that entities holding properties that are not owner-occupied need to review the new requirements carefully.

There are three notable differences in the accounting for investment properties between the old and new Irish GAAP.

1. In the definition itself, old Irish GAAP excluded properties that were occupied by group companies and these had to be treated as tangible fixed assets and depreciated. FRS 102 includes them as investment properties. Therefore, these properties may no longer be depreciated and may be valued at fair value.

2. Although both GAAPs require investment property to be measured at fair value (the old GAAP terminology was different but gave essentially the same measure) the movements were recognised in different places. Under old GAAP gains and losses in value were recognised in reserves (via the Statement of Total Recognised Gains and Losses (‘STRGL’). FRS 102 requires such gains/losses to be shown as part of profit in the profit and loss account.

3. In old GAAP, gains on investment property valuations did not normally trigger deferred taxation, unless there was a binding commitment to sell, which would not usually exist at the time the valuation was conducted. In FRS 102, section 19, deferred tax must be provided on all gains and in the case of investment property, the deferred tax will appear in the profit and loss account as part of the taxation charge for the year.

The new approach means that when there are losses, there is no longer any need to apportion the loss to previously reported gains. However, reported profits will be directly impacted by the new approach. The impact may not always be positive.

On transition, loan covenants may need to be reviewed and new arrangements made with lenders, if property borrowers are not to be found in breach of covenant. These breaches could trigger demands for loan repayment, so preparation is key.

FRS 102 Transition Service

Please ask us about our bespoke FRS 102 Transition Service where we will examine client accounts before/after transition and give you a tailored report explaining the issues arising and whether the transition has been successful or not. To enquire just send an e-mail to

Transition Checklist

We provide you with an FRS 102 Transition Checklist which helps quickly identify the issues you need to focus on. The Checklist retails for €100 + VAT and comes complete with:

  • a free template letter to clients explaining the main changes to Irish GAAP and
  • a free document listing the Main Differences Between Old Irish GAAP and FRS 102.

Go to for details.