IAS 25
Withdrawn
Accounting for Investments
Governed accounting for investments in equity and debt securities, and investment property, offering entities a genuine choice of measurement bases. Withdrawn in 2001, split between IAS 39 (later IFRS 9) and IAS 40.
Withdrawn Standard
IAS 25 (issued 1986) governed accounting for investments in equity and debt securities, and investment property, offering entities a genuine choice of measurement bases. It was superseded in 2001, split between IAS 39 Financial Instruments: Recognition and Measurement (itself later replaced by IFRS 9) and IAS 40 Investment Property.
It is retained here for historical reference. For current investment accounting, apply IFRS 9 (financial instruments) or IAS 40 (investment property).
Current Standard
IAS 39 Financial Instruments 1
Conceptual Framework Linkage
A permissive, choice-heavy predecessor
IAS 25 reflected an earlier era of IFRS standard-setting, where genuine measurement choice (rather than principle-driven, criteria-based classification) was common. The Conceptual Framework's comparability objective is best served when similar investments are measured consistently across entities – a goal IAS 25's broad menu of options genuinely undermined, motivating its eventual replacement by the far more prescriptive IAS 39 (and later IFRS 9) and IAS 40.
HOW IAS 25 MAPPED TO THE FRAMEWORK
Comparability weakness – the genuine choice between cost and fair value/market value for both current and long-term investments meant economically similar holdings could be measured very differently across entities An early recognition of fair value's relevance – IAS 25 nonetheless represented an important early acknowledgement that fair value (or "market value") could be more relevant than historical cost for certain investment categories – a principle later developed far more rigorously by IAS 39/IFRS 9 and IFRS 13 Investment property bundled in – IAS 25 treated investment property as just another category of "investment," rather than recognising its distinct economic characteristics (a real estate asset held for rental/capital appreciation) – a gap IAS 40 later addressed with dedicated guidance
IAS 25's broad measurement choice reflects the IASC's earlier, more permissive approach to standard-setting – a philosophy the organisation progressively moved away from as it matured, converging toward more criteria-based, less choice-driven standards.
The measurement menu, at a glance
Investment categoryPermitted measurement bases
Current investments (marketable securities)Lower of cost and market value, OR market value directly
Long-term investmentsCost, revalued amount, OR (for marketable securities) lower of cost and market value
This genuine choice across multiple bases is precisely what later standards (IAS 39, then IFRS 9) progressively narrowed, replacing broad preparer discretion with criteria-based classification.
2
Scope & Applicability (Historical)
What IAS 25 covered
IAS 25 applied to accounting for investments in marketable securities (equity and debt) and investment property, excluding investments in subsidiaries/associates/joint ventures (governed separately by IAS 27/28/31).
This exclusion of subsidiaries/associates/joint ventures reflects the same scope boundary maintained by IFRS 9 today – investments conferring control, joint control, or significant influence have always been treated separately from "portfolio" style investments.
Key definitions you must know (historical)
Current investment (original)
An investment readily realisable, intended to be held for not more than one year.
Long-term investment (original)
An investment other than a current investment – intended to be held for more than one year, or without a specific intention to dispose of it in the near term.
Investment property (original)
Property held for rental income or capital appreciation, rather than for use in production or administrative purposes.
3
Classification – Current vs Long-Term Investments (with worked example)
An intention-based distinction, predating today's more objective tests
Classification depended largely on management's intention regarding the holding period – a relatively subjective test compared to IFRS 9's later, more objective business-model and contractual cash flow characteristics tests.
Example 1: Classifying a marketable security under IAS 25
An entity purchases listed equity shares, with management intending to sell within the next 6 months to fund an upcoming capital project.
Given the specific intention to sell within 12 months, this qualifies as a current investment under IAS 25 – measured at the lower of cost and market value, or at market value directly, per the entity's elected accounting policy (Section 4).
4
Measurement Choices for Current Investments
A genuine, freely elected policy choice
Current investments could be carried at either: the lower of cost and market value (aggregated on a portfolio or individual basis) – a conservative, prudence-driven approach; or at market value directly, with changes recognised either in income or as a revaluation reserve – a genuinely more fair-value-oriented approach, decades before IFRS 9's FVTPL/FVOCI categories formalised similar concepts.
5
Measurement Choices for Long-Term Investments
Cost, revaluation, or lower-of-cost-and-market
Long-term investments could be carried at cost (subject to write-down for other than temporary impairment); at a revalued amount, with a full revaluation policy applied consistently to the whole category; or, for marketable securities, at the lower of cost and market value on a portfolio basis – offering considerably more flexibility than the criteria-driven classification IAS 39/IFRS 9 later introduced.
6
Investment Property (Historical Treatment)
Bundled within the general "investment" measurement choices
IAS 25 treated investment property as simply another type of long-term investment, subject to the same broad cost/revaluation measurement choice as equity and debt securities – without the dedicated fair value model, specific transfer rules, or detailed disclosure requirements IAS 40 later developed specifically for this asset category once it was recognised as warranting its own standard.
7
Disposal of Investments
Gain/loss recognition, and revaluation reserve treatment
On disposal, the difference between net disposal proceeds and carrying amount was recognised as income/expense – for investments carried at a revalued amount, any related revaluation surplus was typically transferred directly to retained earnings on disposal, rather than being recycled through profit or loss, an approach broadly consistent with how IAS 16's revaluation surplus is treated today.
8
Why IAS 25 Was Split
Growing complexity demanded dedicated standards
As financial instruments and investment property each grew significantly in complexity and economic importance during the 1990s, the IASC recognised that IAS 25's broad, choice-heavy, "one standard fits all investments" approach was no longer adequate. IAS 39 (1998, effective 2001) was developed specifically for financial instruments, introducing the far more detailed classification/measurement/impairment/hedge accounting framework. IAS 40 (2000) was developed specifically for investment property, introducing the dedicated fair value model. IAS 25 was withdrawn once both replacement standards became effective.
9
Disclosure Requirements (Historical)
Required disclosures under IAS 25
Accounting policies for determining carrying amount of investments (cost, revaluation, or lower-of-cost-and-market) Market value of marketable securities, where carried at cost Significant restrictions on the realisability of investments, or the remittance of related income/disposal proceeds
10
Critical Judgments & Estimates (Historical)
Where management judgement mattered most
SIGNIFICANT JUDGEMENTS
Classifying an investment as current vs long-term, based on management's intention Which of the available measurement bases to elect for each investment category
SIGNIFICANT ESTIMATES
Market value of investments where an active market existed Whether a decline in value was "other than temporary," triggering a write-down
The heavy reliance on management intention for classification, and the genuine measurement choice available, made IAS 25 considerably less comparable across entities than the later, more criteria-driven IAS 39/IFRS 9 and IAS 40.
11
IAS 25 vs Modern IFRS 9/IAS 40
Comparison – IAS 25 (1986) vs current IFRS 9 & IAS 40
FeatureIAS 25 (withdrawn)Current (IFRS 9 / IAS 40)
Financial instrument classificationIntention-based (current vs long-term), broad measurement choiceObjective business model + SPPI cash flow tests (IFRS 9)
Investment property treatmentBundled within general "investment" rulesDedicated standard (IAS 40) with a specific fair value model and transfer rules
Impairment approach"Other than temporary" decline write-down, judgement-basedStructured expected credit loss model (IFRS 9), or fair value model with no separate impairment concept (IAS 40)
The overall trajectory from IAS 25 to today's standards mirrors a broader pattern across IFRS history – replacing broad, intention/choice-driven guidance with narrower, criteria-based, more comparable frameworks.
12
Statement Mapping (Historical, Under IAS 25)
Comprehensive event-to-statement mapping table
Event / transactionStatement(s) affectedNotes
Current investment measured at market valueSOPL SOFPOr via a revaluation reserve, per elected policy
Long-term investment revaluationOCI SOFPRevaluation surplus, similar to IAS 16 mechanics
Write-down for other-than-temporary impairmentSOPL SOFPJudgement-based recognition trigger
Disposal – gain/loss recognitionSOPLRevaluation surplus transferred directly to retained earnings, not recycled
13
Related Standards
Cross-reference map
StandardConnection
IFRS 9The ultimate successor for financial instrument investments, via IAS 39
IAS 40The direct successor for investment property specifically
IAS 27 / IAS 28 / IFRS 11Always governed control/joint-control/significant-influence investments separately from IAS 25's scope
14
Quick-Reference Glossary
Other than temporary decline
A decline in an investment's value judged to be more than a short-term fluctuation, triggering a write-down under IAS 25's cost-based measurement option.
Marketable security
A security traded in a market where prices are readily available, eligible for the lower-of-cost-and-market or market value measurement options.
Current investment
An investment readily realisable, intended to be held for not more than one year – measured at lower of cost and market value, or at market value directly.
Long-term investment
An investment other than a current investment – intended to be held for more than one year, or without a specific intention to dispose of it in the near term.
Investment property
Property held for rental income or capital appreciation, rather than for use in production or administrative purposes – later governed by IAS 40.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows