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hi i have some inquiries with regards to question 1
1. in license income, answer shows that ‘if it’s appropriate that the revenue is deferred…………………… revenue is recognized could be inappropriate’
what i do not understand is that, if revenue is deferred, why recognizing revenue is inappropriate ??
2. in portfolio of equity shares, it’s an investment in equity which then should either be classified as fair value through profit or loss(FVTPL) or fair value through other comprehensive income(FVTOCI).
But why the answer shows that it should be recognized as either amortized cost or FVTPL ?
i thought amortized cost was not applied for investments in equity in accordance with IFRS 9 so im not sure why that suddenly appear for investments in equity measurement.
1. Revenue is either recognised (i.e. in the current period) or deferred (i.e. to be recognised in a later period – the two are mutually exclusive. If revenue should not have been deferred, it should have been recognised (and vice versa) – so if one is inappropriate , so too is the other.
2. I think your first sentence states the irrevocable election to present FV changes in investments in equity instruments in OCI rather than PL. But this does not apply to equity investments that are “held for trading”.
The statement in the answer “IFRS 9 which requires financial assets to be classified and then measured subsequent to initial recognition at either amortised cost or at fair value through profit or loss” is a general rule – it is not stating that this is a choice for the portfolio. It then goes on to say that FVTPL is the correct treatment (because the business model does not meet the conditions for measurement at amortised cost).
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