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Investment Value in Deferred Consideration

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Investment Value in Deferred Consideration

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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    Posts
  • May 30, 2023 at 8:04 am #685438
    saadathar14
    Participant
    • Topics: 10
    • Replies: 8
    • ☆

    Sir,
    When we discount deferred consideration while doing consolidation, the entry we make is:

    Investment Dr.
    Deferred Consideration Cr.

    why in subsequent years, the value of investment recorded in separate financial statements is not increased when the deferred consideration liability is increased with the unwinding of discount. Although I understand the concept of unwinding yet this question is asked just to clear the confusion related to investment value rather deferred consideration liability.

    Thank You!

    May 31, 2023 at 7:09 am #685552
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3396
    • ☆☆☆☆☆

    Double entry is:

    Dr P&L – finance cost
    Cr Liability

    Investment has been measured at fair value as at the date of acquisition – you can remeasure is as FVPL or FVOCI but not worth the hassle in practice.

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