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Hi Tutor P2,
My question is come from ACCA P2 June2010.
Question1 (4)
If purchase of bond which classified under AFS in year2007.
The loss recognised in equity was $0.6 million in year 2009.
In year2010 , the bond is impaired .
No accounting entries have been made in the financial statements for the above bond since yr2009.
The question required to prepare consolidated statement of comprehensive income for the year ended 2010.My question: why the $0.6 million is adding back to OCI when the loss on bond is now recognised?
hey ,
i think this might be the solution for your problem.[quoted from the kaplan text]
For AFS Financial assets gains and losses [$0.6m] is initially disclosed as OCI and recognised in equity and when it is sold or impaired or derecognised the cumulative gain or losses previously recognised is reclassified to profit or loss…
so the loss of $0.6m previously deducted from OCI is added back to the same and reduced in income statement together with the current year impairment. .Hi Rony,
Thanks for your help.Do you might help me on another issue relating to OCI?
The question is from ACCA P2 June2010.I do not understand answer for question
1(6) why revaluation adjustment for PPE 1.6 is adding back to OCI?hey ,
even i had the same doubt over that adjustment.I had actually left that. But when i looked up again yesterday i “think” I hav found out what they hav done…
If you look at that loss of $1.6m, they’ve reduced it from the income statement and added back the same in the OCI. so the net effect is actually NIL. If u had observed the related adjustment in the question, they hav mentioned that the revaluation loss and the depreciation has already been accounted for in the comprehensive income. .
so I think they wanted to test our knowledge on the computation of the revaluation loss. . if u hav noticed they haven’t charged the related depreciation in the income statement.
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