Notes to the Consolidated Financial Statements Dollar amounts are in thousands of Canadian dollars (except share and per share amounts) 2.  Significant Accounting Policies (continued)  (i) Completed investment property (ii) Investment property under construction (“IPUC”) Investment properties are measured initially at cost, including transaction costs. Transaction costs include deed transfer taxes and various  professional fees. Subsequent to initial recognition, investment properties are recorded at fair value. Fair value is determined based on a  combination of internal and external processes and valuation techniques. Gains and losses arising from changes in fair values are included  in the income statement in the year in which they arise. Investment property is derecognized when it has been disposed of or permanently withdrawn from use and no future economic benefit  is expected. Any gains or losses on the retirement or disposal of investment property are recognized in the Statements of Income and  Comprehensive Income in the year of retirement or disposal. Transfers are made to investment property when, and only when, there is a change in use, evidenced by the commencement of operating  leases. transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of  development. The cost of development properties includes direct development costs, realty taxes and borrowing costs directly attributable to the  development. Under the requirements of International Accounting Standard 40 ‑ Investment Property (“IAS 40”), IPUC is measured at  fair value at each reporting date, with the recognition of gains or losses in the income statement. If the fair value of IPUC is not reliably  determinable, but the Company expects the fair value of the property to be reliably determinable when construction is complete, it  measures that investment property under construction at cost until either its fair value becomes reliably determinable or construction is  completed (whichever is earlier). Although IPUC is measured at fair value, Killam’s policy is to present its Statements of Income and Comprehensive Income as if borrowing  costs related to the construction are capitalized. Borrowing costs directly attributable to the acquisition or construction of an asset that  necessarily takes a substantial period of time to get ready for its intended use or sale are recorded as part of the cost of the respective  assets. The interest is calculated using the Company’s weighted average cost of borrowings after adjusting for borrowings associated  with specific developments. Where borrowings are associated with specific developments, the amount is the gross interest incurred on  those borrowings less any investment income arising on their temporary investment. interest is capitalized from the commencement of  the development work until the date of substantial completion. The capitalization of borrowing costs is suspended if there are prolonged  periods when development activity is interrupted. Interest is also capitalized on the purchase cost of a site or property acquired specifically  for redevelopment but only where activities necessary to prepare the asset for redevelopment are in progress. The Company considers  substantial completion to have occurred when the property is capable of operating in the manner intended by management. Property and equipment are stated at historical cost less accumulated depreciation and are mainly comprised of head office buildings,  leasehold improvements and IT systems. The estimated useful lives, residual values and depreciation method are reviewed at each  yearend, with the effect of any changes in estimate accounted for prospectively. These items are amortized on a straight‑line basis over  their estimated useful lives ranging as follows:  (G) Property and Equipment (iii) Borrowing costs related to IPUC (H) Inventory (I) Cash (J) Share‑Based Compensation inventory represents manufactured homes available for sale. the manufactured homes are valued at the lower of cost (purchase price  plus delivery and setup costs) and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business  based on market prices at the reporting date less costs to complete and the estimated costs of sale. Cash is comprised of bank balances and interest‑earning bank accounts. The Company issues share‑based awards to certain employees and non‑employee directors whereby employees render services as  consideration for equity instruments (equity‑settled transactions).  72  Killam ProPerties inc | 2013 Building  40 years Heavy equipment  15 years Vehicles  10 years Furniture, fixtures and office equipment  5‑10 years leaseholds lease term