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- This topic has 4 replies, 2 voices, and was last updated 9 months ago by
alawi sayed.
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- June 5, 2022 at 8:41 am #657406
Hello Sir,
Q1
In case of disposing of equity investment which have been measured at fair value through OCI then where the gain on disposal will go as well as the cummulative gain with regard to the same asset.Skeptic is about to dispose of an equity investment in another entity which is measured at fair value through other comprehensive income. Skeptic expects to make a gain on disposal; a cumulative fair value gain has already been recognised over the period of holding this asset.
Select the correct accounting treatment of the gains in the year of disposal in accordance with IFRS 9 Financial Instruments.
Gain on disposal :where the credit will go : P&L
OCI
retained Earnings
Reclassify to P&L
Do not Reclassify to P&L
Transfer to separate component of equityCumulative gain :where the credit will go : P&L
OCI
retained Earnings
Reclassify to P&L
Do not Reclassify to P&L
Transfer to separate component of equity_________________________________________________________________________________
Q2If we say that the investment is measured at faire value through p&L or faire value through OCI
does this mean that the investment value will not appear in the balance sheet in assets and instead it will only go to those accounts.or it means that only their respective gain and loss will go there in P&l and OCI
Thanks ,
June 5, 2022 at 9:55 am #657431Hi,
If we dispose of an equity investment then we will record a profit or loss on disposal through profit or loss. This is simply calculated as the difference between the proceeds and the carrying value.
If the investment is held as FVTOCI then the gains that have accumulated in reserves (other components of equity) will be transferred to retained earnings in the SOCIE.
Thanks
June 5, 2022 at 6:19 pm #657469Thanks a lot Sir.
What about my Q2 .
Thanks,
June 7, 2022 at 8:48 pm #657770Sorry, totally missed the second question as there was an advert that diverted my attention.
Yes, the investments appear on the SFP as NCAs and their classification (FVTPL or FVTOCI) will determine where the gain/loss will go.
Thanks
June 7, 2022 at 9:59 pm #657802Thanks a lot for clarification.
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