Investment property is property held either to earn rental income, or for capital appreciation (including future re-development) or for both, but not for sale in the ordinary course of business.

Investment property is initially measured at cost, which includes the purchase cost and any directly attributable expenditure. Investment property is subsequently valued at its fair value at each reporting date. The difference between the fair value of an investment property at the reporting date and its carrying value prior to the valuation is recognised in the Abridged Income Statement as a fair value gain or loss. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in the Abridged Income Statement.

During the financial year, a prior period error was identified regarding the acquisition cost of an investment property. Legal costs and a deposit paid directly by the directors on behalf of the company were previously incorrectly recognised within equity reserves instead of being recognised as a liability due to the directors.

This error has been corrected by restating the prior period comparative figures. The correction increases Creditors: amounts falling due within one year and reduces Retained Earnings by the amount of the paid costs by £46,546.

There is no impact on the brought-forward net carrying value of the property, as subsequent historical impairments had already brought the asset to its correct recoverable amount.

Retained profits have been restated to reflect the correction of historical reserves allocation.