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Investment in shares question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Investment in shares question

  • This topic has 5 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • September 20, 2015 at 4:05 am #272529
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    a company invested in 20000 shares of a listed company in oct 07 at a cost of 3.8/share. at 31 dec x7, the market value was 3.4. the company are not planning on selling these shares in the short term and elect to hold them as FVOCI.

    what will be the extract for ye 31 dec x7.

    the answer is reproduced below:

    “the investment in these shares is considered to be a financial asset at fair value thru profit or loss. (altho it can be designated upon initial recognition to be FVOCI) ”
    ————————————————————————————————-
    why is the given answer not using FVOCI when the question is declaring it as such?

    September 20, 2015 at 9:27 am #272542
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    That’s a good question! Maybe making the most out of the question by showing knowledge that such an investment should be FVTPL unless that FVOCI election is made as it has been in this question?

    Maybe

    Maybe just for the benefit of students who would look at this question (without the benefit of the answer) and maybe say to themselves “Why is this FVOCI? Surely this should be FVTPL” and the printed solution explains that apparent anomaly

    Maybe

    OK?

    September 20, 2015 at 12:36 pm #272558
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    so….since we dont know whether the initial election was for fvoci and that we know the default is fvpl … is that why fvpl applies in this case?

    September 20, 2015 at 8:44 pm #272580
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    I didn’t get that impression!

    It seems to me that the person that prepared the answer has overlooked the fact that the company has elected to treat them as FVOCI

    It happens!

    September 21, 2015 at 12:12 am #272597
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    cool.. thank u….

    September 21, 2015 at 11:13 am #272621
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

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    Posts
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