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FV gain on investment.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › FV gain on investment.

  • This topic has 1 reply, 2 voices, and was last updated 7 months ago by Stephen Widberg.
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  • April 11, 2020 at 2:26 pm #567206
    qawsedrf

    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 #567244
    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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