Hi,
Q1) Are we in general re-measured FVTOCI investments to their fair value prior to a sale?
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Investment in equity instruments (FVTOCI):
Q2) Must fullfill both of the followings?
Not held for trading;
AND held for the long-term
Q3) Derecognition of the Equity instrument (i.e: All shares were sold)
Which method is correct?
Method 1
Gain on disposal of shares 3k, OCI gains on revaluation 5k:
1) Dr Cash 3k, Cr SPL 3k
2) A reserve transfer: Dr OCI Revaluation/Accumulated gains 5k, Cr Retained earning 5k
Method 2
Dr Cash 3k, Cr OCI 3k
OCI (Gains on revaluation) – Do nothing.
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Investment in Debt (FVTOCI)
Q4) Derecognition of the Bond, are the below entries correct?
Gain on disposal of bonds 3k, OCI gains on revaluation 5k:
1) Dr Cash 3k, Cr OCI 3k
2) A reserve transfer: Dr OCI Revaluation/Accumulated gains 8k (5+3), Cr Retained earning 8k
Any assistance you can provide would be greatly appreciated!
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IFRS 9: Financial instrument (FVTOCI)
4y ago#1Q1. Yes
Q2. Not held for trading AND irrevocable election.
Q3. Method 2. ASSUMING THERE ARE NO DISPOSAL COSTS WHICH MUST BE EXPENSED IN P&L. Note that the 5 transfer is within reserves and does NOT hit the P&L for the year.
Q4. Step 1 OK. Step 2 NOT OK - you Dr OCI and Cr P&L (changing reported profit for year; not a simple reserve transfer).
ONE QUESTION PER POST IN FUTURE PLEASE :)
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