Consolidated Statement Of Financial Position

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October 3, 2020 at 1:36 pm #587266
khawarbutt
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Hi,
The question relates to Consolidated Statement Of Financial Position.

If the parent has classified the investment in subsidiary as Fair Value Through Profit & Loss(FVPL i.e. held for trading) in its individual financial statements, it would revalue the investment at each reporting dat taking the gains/losses to P&L and eventually to retained earnings. Lets say there were gains earned to date. Would the difference between the consideration paid and the fair value of investment in parents individual financial statements be eliminated and reversed out upon consolidation as it is not really a gain to the group?

Much Appreciated
October 3, 2020 at 9:39 pm #587302
P2-D2
Keymaster
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Hi,

The investment in the subsidiary would not be classified as FVTPL, so you wouldn’t need to worry about this.

Thanks
October 7, 2020 at 7:38 pm #587652
khawarbutt
Participant
- Topics: 14
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Hi,
Thanks for the swift response. IFRS 9 says that Investment in equity shares can be classified as FVTPL (if held for trading) or FVOCI (if not held for trading). Why would it not be classified as FVTPL.

Cheers.
October 11, 2020 at 8:50 am #588579
P2-D2
Keymaster
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Hi,

You do not purchase a subsidiary with the purpose of holding it for trading, so wouldn’t see the investment classified as FVTPL.

Thanks
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