[Richard]

Correct. I am answered.

Thank you for replying even at this hour. Very much appreciated.

You sir, are a gentleman and a scholar… quite literally.

[Richard]

Hi Mike

I am unclear with regards to the calculation of a subsidiary’s carrying amount when it is under impairment review.

I have come across 2 separate methods for calculating carrying amount not consistent with each other.

I refer to Past Paper Q1 P2 June 2013 for first method: NET Assets as per year end SOFP are used;

vs

Past Paper Q1 P2 December 2012 second method: TOTAL Assets as per year end SOFP are used

When is it appropriate to use net assets rather than Total assets and vice versa?

[Richard]

Mike

Can I take it as gospel then, that under IFR 9 – all investment income from an investment held at FVTOCI must be taken to P/L?
I Think that is the learning point I had not properly grasped as I took it to mean that the election to hold an investment at FVTOCI applied to not only valuation gains and losses being recognised in OCI but all related income and expenditure as well, until de-recognition? (what a foolish thing to think, now that I read that back.)

The point about dividends that exceed current year profits is now clearer.

Thanks again.

[Richard]

Mike

Apologies! I’ve had my fair share of past exam questions open in front of me, lately. The correct reference is P2 December 2012. Question 1. Note 4.

Thanks for replying.

[Richard]

Hi Mike

As per Jun 12 exam.

Facts in scenario:
– Puttin is an Associate of Minny.
– Minny holds Puttin at FV through OCI as per IFRS9.
– Minny pays a 2m dividend to Puttin, which is wrongly credited to OCI.
– The investment in associate in Puttin’s books is 48m and 50.5m in the consolidated books.

Please could you explain a bit further why it is incorrect for the dividend payment to be credited to OCI and should rather, be credited to profit and loss for the year?

The solution mentions this is because Puttin is not impaired as 48<50 and also that the dividend does not exceed TCI for the period it was declared.
This is a point I am failing to grasp, if you could please simplify.

Thanks

[Richard]

Answered about 80 marks worth so not much room for error on the bits I did answer. Anyone know how long before model answers uploaded? Not sure if I waffled too much hahaha.

[Author]

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