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Under the additional information:
(i) On 1 December 20X1, Jocatt required 8% of the shares of Triget for 4 million and recorded it as a financial asset at cost of purchase. This investment was designated to be measured at Fair Value through other comprehensive income.After that, Jocatt had required a further 52% of shares. On the acquisition date, the FV of 8% investment has risen to $5m.
The suggested answer provided by Kaplan state that the gain of 1m (5-4) should recognized in P/L.
My inquiry is why the gain of $1m is recognized at profit or loss instead of other comprehensive income as the question has stated that the investment was designated to be measured at FVTOCI.
This is my first time posting a question, apologize if I make some offence or asking a stupid question.
Thank you so much!
You can find how to treat this gain in the opentuition note Chapter 6 – 1.1 No control -> control, remeasure original investment to FV and gain to profit or loss.
Also, in order to classify the unrealized holding gain/loss in OCI, the investments have to be classified as available for sale.
This is only my opinion as a student, you can comment if I am wrong.
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