Real Estate and Plant & Machinery Valuations for IFRS 

India’s adoption of International Financial Reporting Standards (IFRS) from March 31, 2011 requires companies to convert accounting information to IFRS in their reporting on March 31, 2010 in order to facilitate the creation of comparative financial statements.

Depending on the type of company, nature of the real estate, and the level of reporting decisions concluded, IFRS requires the determination of fair values of property at each reporting period. IFRS gives an opportunity to companies to report their real estate assets based on fair value rather than historic cost. The concept of fair value measurement in IFRS is more significant than in Indian GAAP. IFRS requires fair value to be reported either directly on the balance sheet and statement of earnings or at a minimum in the notes to the financial statements.

The advent of IFRS in India will have significant implications on accounting statements. It will impact the basis for recognizing revenues, evaluate multiple element contracts and barter transactions, and allow the use of fair value for measurement of assets. IFRS allows companies to measure and report their real estate investment; which is quite ambiguous in the Indian GAAP. IFRS first-time adoption, generally demands retrospective application, that is, requirements of IFRS need to be applied assuming that the entity has followed IFRS since inception. Though exceptions are provided in specified areas, retrospective application of IFRS poses a big challenge in accounting for property, plant and equipment; especially in the case of capital intensive entities. Fair value is an important and complex concept in accounting. Determination of fair value involves market knowledge, experience and professional judgment. The process thus calls for active involvement of qualified valuers in determining the fair value.

Any entity covered under these IFRS standards will require our valuation services:

IAS 16: Property Plant and Equipment
IAS 17: Leases
IAS 40: Investment Property
IAS 2: Inventories
IAS 11: Construction Contracts
IAS 36: Impairment of Assets
IFRS 3: Business Combinations
IFRS 5: Non Current Assets

After extensive work across the globe, Colliers International is adept    in assisting companies in this transition to the new standards in India. IFRS is not new to Colliers International; we have been working extensively on IFRS standards since 2005 in Europe and Australia. In Canada and US we have been working on this from early this year. Experience from these countries has shown that engaging external valuation consultants earlier in the process will mitigate some of the challenges of the transition process.

Our strategy at Colliers is to provide a cost effective IFRS valuation plan customized to the Client’s real estate portfolio. We work closely with the Clients IFRS personnel and auditors to accustom our reporting to the required specifications. Our technology also allows for specialized reporting tailored to the Client’s need for property details and reporting frequency. Our qualified team includes RICS (Royal Institution of Chartered Surveyors) certified valuers with extensive regulatory experience in property valuation for financial reporting. With offices across India, Colliers is best suited to provide valuation services spanning a broad spectrum of real estate portfolios across India.

Colliers assists in the development and implementation of a comprehensive IFRS plan tailored to the company’s specific real estate valuation needs. The independent real estate expertise that Colliers International valuers provide is an integral part of the solution to IFRS conversion and compliance.

Our international experience has shown that engaging valuation experts early is the most cost-effective and sustainable approach to IFRS conversion. Each company will have a unique set of circumstances that require expert advice and judgment. Early engagement of Colliers consultants will facilitate advanced planning to reduce the risk associated with compliance and transition costs.

Colliers is ready to assist your company with IFRS transition.

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