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financial instruments

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › financial instruments

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 23, 2019 at 1:00 pm #517011
    reem1589
    Participant
    • Topics: 61
    • Replies: 17
    • ☆☆

    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?

    May 24, 2019 at 7:35 pm #517205
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    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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