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Sir could u explain ifrs 3 logic on
fair value of an asset below its carrying amountHi,
If an asset is valued below its carrying value then we need to reduce it on consolidation in our net asset working.
The logic is that we are reflecting in the group accounts what we believe the subsidiary is worth based on our acquisition price.
Thanks
Ok sir , I understand when fair value of asset decreases below its carrying amount the value of asset should decreases by that amount but why we adding depreciation i think it should be deducted.
…….Hi,
I’m not too sure what you’re referring to with regards to the depreciation being added. Where is it that you’ve seen this specifically, please?
If you are looking at an example where the asset is reduced in value, then the future depreciation will be less and so the saving on depreciation is added back, not the actual depreciation itself as this will have been charged in the individual accounts already. It is just now that the depreciation charge is lower than what has been charged.
Thanks
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