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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Investment in shares question
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) ”
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why is the given answer not using FVOCI when the question is declaring it as such?
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?
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?
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!
cool.. thank u….
You’re welcome