Could you please explain how to the answer for the following question is $1852 loss in P&L.
Dexterity Co. has investments at fair value through profit and loss on 1 April 20X5 of $25,000. The investments at fair value through profit and loss are held in a fund whose value changes directly in proportion to a specified market index. At 1 April 20X5 the relevant index was 1,944 and at 31 March 20X6 it was 1,800.
What will be the gain/loss on fair value in statement of profit or loss and other comprehensive income of Dexterity for the year ended 31 March 20X6?
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financial instruments
Hi,
I doubt that you would be required to do the calculations as such in the exam but if we bought it at $25,000 when the index was 1,944 then we need to use the fact that its value changes in proportion to the index.
To do so we take 25,000/1,944 = 12.86 and then multiply by 1,800 to get $23,148. The difference between the $25,000 and $23,148 then gives you your answer.
Thanks
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