a. Two reasons for holding investment property and the two methods of measurement as contained in IPSAS 16:

1. Reasons for holding investment property:
   • To earn rentals: Public sector entities may hold investment properties primarily to generate rental income, which contributes to their revenue. For example, a university may lease part of its land to private businesses or individuals to generate rental income for its operations.
   • For capital appreciation: Investment properties are also held with the expectation that their value will increase over time, resulting in potential capital gains when sold. A local government could hold undeveloped land with the intention of selling it when its value appreciates.
2. Methods of measurement under IPSAS 16:
   • Cost Model: Under this model, investment property is measured at its cost, minus accumulated depreciation and any accumulated impairment losses. The cost model is similar to the accounting treatment of property, plant, and equipment under IPSAS.
   • Fair Value Model: In the fair value model, investment property is measured at fair value, and changes in the property’s value are recognized in surplus or deficit for the period. This model provides a more dynamic reflection of the property’s current market value.

b. Examples of investment property and non-investment property:

Investment Property Examples:

1. Land held for long-term capital appreciation: Land purchased by a government agency for investment purposes and held with the expectation that its value will increase over time.
2. A building leased to a private entity: A government-owned building rented out to private businesses for commercial purposes.
3. Vacant land held for future use as an investment property: A local government holding a piece of land that is not currently used but is intended for future commercial leasing.
4. Property under construction or development for future use as investment property: A building being developed by a municipality for the purpose of leasing it to businesses or organizations in the future.

Non-Investment Property Examples:

1. Government office buildings: Buildings used for government operations and administrative purposes, such as ministries and departments.
2. Schools and hospitals: Publicly owned buildings used to provide social services like education and healthcare, not for generating rental income or capital gains.
3. Land used for public parks: Land designated for public recreational use, maintained by the government without the intention of earning rental income.
4. Infrastructure, such as roads and bridges: These are assets owned by the government for the purpose of public transportation and infrastructure development, rather than as investment properties.