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Financial instruments individual accounts of investor

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Financial instruments individual accounts of investor

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 30, 2017 at 8:38 am #404265
    trendline
    Member
    • Topics: 22
    • Replies: 15
    • ☆

    Hi,

    1) Parent owns 60% of the equity of a subsidiary
    In individual accounts under IFRS 9 this is equity so must be held as FVTPL or FVTOCI if an election is made – so why does my textbook talk about holding at cost as an option?
    Can you confirm the individual accounts will be FVTPL or FVTOCI please.

    2) Company owns 25% of the equity of an associate
    Under IAS 28 this must be measured using the equity method, cost + share of retained earnings
    Can you confirm this overrides IFRS 9 in the individual accounts? Why does my textbook talk about holding at cost as an option?

    Thanks very much for all your help by the way – the videos have been very helpful, and with one week to go a good calming influence 🙂

    August 31, 2017 at 11:28 am #404623
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    I’m glad that the videos have helped, just try and stay calm and composed in the run up to the exam. Focus on the basics and you will be fine.

    To answer both of your questions IAS 27 gives us the solution. It allows us to hold the investment at cost, or according to IFRS 9, or as an associate where we equity account. Usually if the investment in the subsidiary or associate is in a quoted company then we would use IFRS 9 in the individual accounts. We tend to use cost if it is unquoted to make like simpler.

    Thanks

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    Posts
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