Valuation and Presentation of Investment Properties in the Financial Statements of Investment Companies

Abstract

The purpose of the article is to explore the issues related to investment properties valuation approach and information disclosure that is useful to external stakeholders. The tasks of the research are reduced to solving a certain set of questions, namely to: establish the approach for initial and subsequent evaluation of the properties, analyze the types and structure of property management income, survey the publicly available information about real estate investments by investment companies. The empirical research is based on data from the financial statements of seven companies with a special investment purpose. It was found that the investment properties were presented in the companies' financial statements at their fair value, which was based on unobservable market prices due to low (or absent) market activity. Contrary to expectations, in the amount of total income the largest share has the income from subsequent valuations of investment properties up to their fair value, but not rental incomes. A relatively high level of disclosure of the required information regarding real estate investments was found.