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FV gain on investment.

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  • April 11, 2020 at 2:26 pm
    FV gain on investment. 2
    qawsedrf
    Participant

    Dear Tutor,

    could you please help me with the following answer on Gain on Investment, (Marchant):

    A fair value gain has been recorded on the investment in Nathan of $95m – $90m = $5m. This gain must be eliminated on consolidation because the calculation of goodwill is based on the fair value of the consideration at the date of acquisition, not at the date of the current financial statements. The double entry for the reversal is:

    DEBIT Other comprehensive income $5m
    CREDIT Investment in Nathan. $5m

    However, the FV of consideration paid at acquisition was 80m 2 years ago. shouldn’t the revsersal be 15m?

    April 12, 2020 at 7:44 am
    FV gain on investment. 3
    Stephen Widberg
    Moderator

    Marchant is a very old question.
    If I remember it asked you to prepare a SPLOCI.
    So the SPLOCI would only show the reversal of the gain that accrued in the current year.

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