- This topic has 1 reply, 2 voices, and was last updated 3 months ago by
Stephen Widberg.
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 9: Financial instrument (FVTOCI)
Hi,
Q1) Are we in general re-measured FVTOCI investments to their fair value prior to a sale?
———–
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.
———————-
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!
Q1. 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 🙂