Purpose: The main purpose of the thesis is to examine the consequences of applying IAS40 on the Swedish real estate companies’ annual reports. How does its application affect the companies’ stockholders’ capital and how do the companies solve the problems that occur due to the application of this standard.

Method: The authors use both the qualitative and quantitative approaches to process the thesis. The primary data comprises of hard data in form of annual reports and the secondary data consists of the soft data as direct interviews and email interviews.

Theory: There aren’t any theories on the subject. The authors base their work on the laws and regulations about the subject.

Empirical base: Hard data from annual reports is represented in tables and make up the primary data of the thesis. The secondary data consists of the summary of the interviews.

Conclusions: The authors have come to the conclusion that the application of the IAS 40 does not imply any dramatic consequence for the business accounting and that the enterprises do not feel any difficulty in applying it. All of the companies have chosen to report in fair value. Certainly, annual reporting has become more expensive but the annual reporting in return has become manageable and gives a better picture of the company. There aren’t any bigger drawbacks with the standard but reporting has become theoretically extensive – that means that the reports contain information that are not necessary.