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Hi,
I have a confusion that would want you to help me with. Regarding the initial recognition of Investment in Equity Instruments,
1. Is this the amount that appear in the Investment in Subsidiary of the parent’s book in consolidation?
2. IFRS 9 require if the investment in equity instruments is measured at FVOCI, the transaction cost will be added to the fair value. Does that mean in parent’s books, we will see the Investment in Subsidiary = cash paid = fair value of equity instrument of sub + transaction cost? How about the requirement of IFRS 3 that transaction cost should not be considered as a part of the business acquisition and should be expensed?Thanks.
Hi,
The transaction costs to do with legal fees would be expenses to profit or loss on acquisition of the shares in a business combination.
The broker fees paid on the acquisition of shares would be capitalised as part of the investment if FVTOCI or expensed if FVTPL.
Thanks
Hi,
Thanks for the reply. Regarding the broker fee, this is not considered as transaction cost in business acquisition?
I’m viewing investment in equity instrument as the same as business acquisition (just acquiring more equity instrument), is it incorrect?
Thanks.
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