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Hi mike
In Q1 it mentioned there us finantial asset recognise at cost it is incorrect. It should recognize at either amortised cost or fair value through pnl .Would like to know why this misstatement caused profit $2 m ? Because initial recognjse at cost is $8 m in jan 15, then in year end may15 fair value is $6. It should be loss in $2 mil as asset value is being reduce.
Thanks
You are, of course, correct in recognising that the error has been made but you have misinterpreted in your post the effect of the necessary correction
These investments have remained in the records at cost of $8m but should have been reduced down to fair value of $6m
So what we are missing is an expense of $2m and, when that adjustment goes through, the draft profit figure will fall by $2m
Therefore we can say that the draft profit figure before adjustment is $2m overstated
OK?
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