Herd Construction Herts Ltd

FRS 102 says Investment properties should either be held at cost or revalued cost and be subject to periodic charges for depreciation over 25 years, except for properties held on lease which should be depreciated over the period when the unexpired term is 25 years or less, or revlaued every year and the revaluation surplus or deficit taken to the profit and loss account.

The directors have decided, due to the cost and inconvenience of independently valuing lots of smallish properties, that the Investment properties should be included in the balance sheet at their historic cost and no depreciation provided.

The directors have reviewed the value of the investment properties and believe the current value is around £2,380,000. No adjustment has been made for this in the accounts.