Investment Property
Land or buildings held to earn rent or for capital gain, not for the company's own use, on the Balance Sheet.
In detail
Investment Property records land or buildings held to earn rent or to gain in value, rather than for the company's own use. A flat rented out to a tenant, or a plot bought to sell later, belongs here rather than under Land or Buildings, so that the Balance Sheet separates the operating assets from the investments. Rent received goes to Rental Income, and the property may be carried at cost with depreciation or at fair value with gains through profit, as the auditor decides under NFRS. Nepal taxes rental income and gains on disposal, so the cost base kept here matters at sale. A building the company occupies itself is never investment property, even if part is sublet.
Formula
Investment Property = Purchase price + Acquisition costs; if depreciated: Monthly charge = (Cost - Salvage) / Useful life months.
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Investment Property | Rs 90,00,000 | |
| Bank Account (rename me) | Rs 90,00,000 |
How to record it in BRAccount
- 01Go to Invoicing > Journal Entry > New dated the purchase; debit Investment Property, credit the bank.
- 02Submit. The entry above posts for the Baluwatar flat.
- 03Optionally create an Asset under Assets > Asset pointing at this account if the property is to be depreciated.
- 04Post the tenant's rent each month with a Sales Invoice to Rental Income.
- 05Open the Investment Property ledger from the chart to read the carrying value.
When to use it
Post through an Asset record or Journal Entry when property is bought for letting. Rent received goes to Rental Income.
Example from the demo books
Dr Investment Property Rs 90,00,000, Cr Bank Account Rs 90,00,000 for a flat in Baluwatar rented out to a tenant.