Contrado Limited, which has diverse activities, owns the Gohar Tower in Karachi, which is the group’s head office. Decide whether the tower falls within the definition of an investment property under IAS 40, an item of property, plant and equipment under IAS 16, or an item of inventory under IAS 2.
This is an item of inventory
This is an item of property, plant and equipment
It is an investment property.
There is not enough information to make a determination
It is an investment property.
The Gohar Tower, being the group's head office, is primarily used to carry out administrative functions rather than generating rental income. As such, it does not meet the criteria for investment property under IAS 40, which requires the property to be held for rental income or for capital appreciation. Instead, the Gohar Tower would typically fall under the definition of property, plant, and equipment (PPE) under IAS 16, as it is used in the production, provision of goods or services, rental to others, or administration by the entity.
This is an item of property, plant and equipment
