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The gain or loss is recognised in profit or loss unless the equity interest previously held was an investment in equity instruments and an irrevocable election was made to hold the investment at fair value through other comprehensive income. In the latter case, in accordance with IFRS 9 (revised October 2010), the gain on derecognition of the investment is taken to other comprehensive income, or, in the SOFP, other components of equity.
I found this in the BPP Study Text.
I was about to ask the same question. The original 14% investment in Puttin was designated as at fair value through other comprehensive income. I thought that the gain $3m should be recognized in “other comprehensive income” in the Statement of Profit or Loss and Other Comprehensive Income and hence in the “Other Components of Equity” in the Statement of Financial Position. Why does it have to be transferred from the Other components of equity to retained earnings?
Does the second bracket on the right hand side Asset Beta Formula
[ Vd (1-T) * ßd / Ve + Vd(1 – T) ] removes the financial risk from the debt beta (so the debt beta only includes business risk)?Is working capital current asset minus current liabilities or only confined to cash+receivable+inventory-payable?
Thank you 🙂 I understand them now.
By the way, I saw in the book that a company can finance working capital with bank overdraft. Why is this? In overdraft, cash (current asset) increases and overdraft (current liabilities) will increase by the same amount. Since working capital is current asset minus current liabilities, working capital remains the same so how can overdraft finance working capital? I had this question for more than a year and I really hope can be solved. 🙁