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Valuation and Performance Reporting in Property Companies Accouding to IFRS
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.
2008 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Applying a historical cost accounting (HCA) concept in property companies led on many occasions to a situation where everyone knew that the figures in balance sheets and income statements were wrong from a market perspective, but the analysts knew how the figures had arisen. Applying a fair value accounting (FVA) concept has led to a situation, on many occasions, where almost everyone believes that the figures in balance sheets and income statements accurately and fairly reflect reality, whereas few have sufficient knowledge how these figures have arisen.Appraisal of property is a complex issue. One of the most important conclusions from the research reported in this thesis is that disclosure regarding applied methods, significant assumptions in property valuations and statements about the connections between appraised values and market evidence needs refinement in financial reports, according to International Financial Reporting Standards (IFRS). As the uncertainty in property valuations cannot be removed, it has to be managed. Providing explicit disclosure about valuations is one important way to manage this issue by reducing the gap of information asymmetry between those who perform valuations and those who are users of financial statements.Other findings reported are connected to issues of consistent application of IFRS other than disclosures about valuations. Such an issue is the border between maintenance expenses and capitalised costs regarding component replacements. On many occasions companies seem to interpret IFRS accounting rules differently in this respect. This could lead to distorted reporting of net operating income (NOI) levels.Another conclusion reported is that NOI for financial reporting purposes are not equivalent to NOI used for real-estate appraisal purposes. In this thesis it has been shown that differences may turn up regarding rental income and maintenance costs in this respect.Fair value adjustments in income statements are another issue handled in this thesis. Empirical studies showed that a majority of the property companies studied reported such adjustments above financial items in the income statement, which seems to be in line with the intentions of the IFRS rules.

Place, publisher, year, edition, pages
Stockholm: KTH , 2008. , 153 p.
Series
Trita-BFE, ISSN 1104-4101 ; 08:82
National Category
Civil Engineering
Identifiers
URN: urn:nbn:se:kth:diva-9243OAI: oai:DiVA.org:kth-9243DiVA: diva2:37725
Public defence
2008-10-22, F3, KTH, Lindstedtsvägen 26, Stockholm, 13:00 (English)
Opponent
Supervisors
Note
QC 20100831Available from: 2008-10-13 Created: 2008-10-13 Last updated: 2010-08-31Bibliographically approved
List of papers
1. Bedömning av nedskrivningsbehov: fastigheter i redovisningen
Open this publication in new window or tab >>Bedömning av nedskrivningsbehov: fastigheter i redovisningen
(Swedish)Manuscript (preprint) (Other academic)
National Category
Civil Engineering
Identifiers
urn:nbn:se:kth:diva-24280 (URN)
Note
QC 20100831Available from: 2010-08-31 Created: 2010-08-31 Last updated: 2010-08-31Bibliographically approved
2. Vilken information från marknaden används som underlag vid värdering av kommersiella fastigheter?
Open this publication in new window or tab >>Vilken information från marknaden används som underlag vid värdering av kommersiella fastigheter?
(Swedish)Manuscript (preprint) (Other academic)
National Category
Civil Engineering
Identifiers
urn:nbn:se:kth:diva-24283 (URN)
Note
QC 20100831Available from: 2010-08-31 Created: 2010-08-31 Last updated: 2010-08-31Bibliographically approved
3. Reference value of commercial real estate
Open this publication in new window or tab >>Reference value of commercial real estate
(English)Manuscript (preprint) (Other academic)
National Category
Civil Engineering
Identifiers
urn:nbn:se:kth:diva-24285 (URN)
Note
QC 20100831Available from: 2010-08-31 Created: 2010-08-31 Last updated: 2010-08-31Bibliographically approved

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CiteExportLink to record
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Citation style
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