Companies in Costa Rica subject to external audit must present financial statements under International Financial Reporting Standards (IFRS), which require periodic fixed asset revaluation, impairment testing, and classification of assets held for sale. This guide explains when a CFIA appraisal is needed for IFRS, how it’s done, and what to expect from the appraiser in 2026.
When does IFRS require an appraisal?
Three main standards requiring professional valuation:
IAS 16: Property, plant and equipment (revaluation)
Allows companies to revalue fixed assets (real estate, machinery) at fair market value instead of historical cost minus depreciation. Revaluation must be done periodically (typically every 3-5 years) to prevent book value from significantly diverging from fair value.
IAS 36: Impairment of assets
When there are signs an asset may have lost value (market decline, physical damage, obsolescence), IAS 36 requires impairment testing comparing book value with recoverable amount (greater of fair value less selling costs, and value in use).
IFRS 5: Non-current assets held for sale
When a company decides to sell a fixed asset, reclassifying it as “held for sale” requires valuing at lower of book value and fair value less selling costs.
Who applies IFRS in Costa Rica?
In Costa Rica, required entities include:
- CONASSIF/SUGEF-regulated companies (banks, insurers, investment funds, brokers)
- Public companies and subsidiaries
- Large taxpayers of Hacienda
- Companies with mandatory external audit
- Bond issuers or BNV-listed
Additionally, many SMEs apply IFRS for SMEs voluntarily or by bank requirement.
IFRS appraisal methodology: step by step
Step 1: Define scope with the auditor
The appraiser coordinates with the external auditor to define:
- Effective date (typically fiscal close: Sept 30 or Dec 31)
- Assets to value (all or only material ones)
- Fair value hierarchy (Level 1, 2, or 3 per IFRS 13)
- Report format per auditor requirements
Step 2: Fair value per IFRS 13
IFRS 13 defines fair value as “the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.” In practice:
- Level 1: quoted prices in active markets (rare in CR real estate)
- Level 2: observable inputs other than quoted prices (direct comparables)
- Level 3: unobservable inputs (modeling with assumptions)
Most CR real estate appraisals operate at Level 2 or 3.
Step 3: Technical method application
Same three IVS methods apply:
- Market comparison (preferred at Level 2 when comparables exist)
- Cost minus depreciation (Level 3, for specialized)
- Income capitalization (Level 3, for income-generating)
The report must explicitly document the IFRS 13 level applied and assumptions.
Step 4: Useful life and depreciation review
IAS 16 requires reviewing useful life and depreciation method at each revaluation. If remaining useful life actually differs from recorded, adjust prospectively.
Step 5: Auditable format report
The external auditor (Deloitte, KPMG, PwC, EY, BDO, Baker Tilly, others) requires the report to contain:
- Complete appraiser identification (CFIA, experience)
- Effective appraisal date
- IFRS 13 level applied with justification
- Assumptions and limitations
- Detailed methodology with calculations
- Comparables with traceability (property folio, date)
- Conclusion with range when applicable
- Reference to applicable regulations
Example: IAS 16 revaluation of CR manufacturing plant
Company: manufacturer in Heredia industrial park Effective date: Dec 31, 2026 Asset: 3,000 m² industrial facility + 5,000 m² land Book value: $1,200,000 (after 17 years of depreciation)
Applied appraisal:
- IFRS 13 level: 3 (unobservable inputs)
- Primary method: cost with depreciation
- Verification method: comparison with similar facilities in Coyol, Ultra Park
Result:
- Land fair value: $1,000,000 (increased due to sector gentrification)
- Construction fair value: $650,000 (physical + functional depreciation)
- Total: $1,650,000
- Revaluation increase: $450,000 (+38%)
Accounting impact: revaluation surplus goes to “other comprehensive income” (OCI), doesn’t affect P&L.
Auditor coordination: practical tips
- Involve the auditor from the start: approve scope and format before hiring appraiser
- Effective appraisal date = accounting close date: not months before or after
- Periodic updates: under IAS 16, revalue every 3-5 years minimum. Waiting more may require large catch-up.
- Documentation: auditor will request support for everything (comparables, invoices for new equivalent machinery, market studies)
- Reconciliation: appraiser delivers fair value; accountant calculates revaluation entry based on that value
Timelines and costs
Timelines:
- Single asset (specific property or machine): 3 to 7 business days from inspection
- Multiple assets (complete plant): 3 to 7 business days once documentation is complete; the inspection schedule is coordinated in the quote
- Recurring annual revaluation (after first): 3 to 7 business days
- Urgent cases for accounting close: 48 to 72 hours, with a surcharge
Reference costs:
- Fees start from approximately USD 300 (₡150,000); the final fee is set in the quote
- What matters most: the number and type of assets (industrial property, machinery batch, or a complete plant with buildings and equipment), their size, their location and the complexity of the analysis the standard requires
Cheaper than an audit with observations due to inadequate revaluation.
FAQ
Can I use last year’s bank appraisal for IFRS? Only if it meets IFRS 13 requirements (value hierarchy, assumption documentation). Standard bank appraisals usually lack IFRS format; consult your auditor.
How often do I revalue under IAS 16? “Sufficiently regular that fair value doesn’t materially differ from book value”; in practice every 3-5 years, or when there are material market changes.
Does revaluation trigger taxes? Revaluation increase goes to “other comprehensive income” (OCI), not P&L. No income tax. It may affect municipal property tax.
Can I revalue only some assets? IAS 16 requires the entire asset class be revalued simultaneously (all plant and equipment, or all real estate). Cannot selectively revalue.
What if the appraisal shows a loss? If fair value is lower than book value, impairment is recorded (IAS 36) in P&L. Mandatory recognition.
Professional scope
Díaz Peritajes, a firm with several professionals founded by Ing. José Alberto Díaz Vidaurre (a CFIA-licensed appraiser, license ICO-3075), has the technical competence for real estate, machinery and industrial equipment appraisals that meet the requirements of IAS 16 (property, plant and equipment), IAS 36 (impairment) and IFRS 5 (non-current assets held for sale). Accounting application and integration into the general IFRS framework (accounting policies, disclosures, external audit, consolidated financial statements) is executed by the company’s CPA auditors and accountants. Our contribution is the technical fair value report; incorporation into financial statements is the responsibility of the accounting team.
Conclusion
IFRS appraisals require an appraiser knowledgeable in both valuation and international accounting framework. Díaz Peritajes regularly works with external auditors in Costa Rica for IAS 16 revaluations, IAS 36 tests, and IFRS 5 reclassifications. Nationwide coverage from Pérez Zeledón and Curridabat. Quote: WhatsApp +506 7272-7270.