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Hi. If there’s Gain/Loss on financial asset.
how do we treat this transaction. i mean, if there’s loss, then we credit the financial asset and we debit profit/loss account or we debit other comprehensive income.
As i found the past year question they do it both ways, and the question is silent whether it is a through profit or loss / other comprehensive income.
depends what election was made at initial recognition of the fin asset !!!! A company can either choose to recognise gain/losses via p/l or oci but i think there are some criterias which need to be met for this and i dont remember them sry xD
There are very few gains / losses which can go through OCI – most go through Statement of Income and, once elected, cannot be changed to OCI
In the exam, the examiner will tell you whether it’s to go through Profit and Loss – there will be no doubt about how you are to treat it
OK?
But in December 2012 question no. 2, addition information no. (v), the question didn’t state whether it is through OCI or Profit or loss, so do we make an assumption during the exam?
the suggested answer recognise the loss through P/L, and does it matters i recognise the loss through OCI.
you said, a very few can go through OCI, do you mean only Gain on Revaluation of Assets can go through OCI? as all gain on revalued asset in the past year questions is through OCI…
For F7 purposes, the only likely entry specifically required to go through OCI is a gain or loss on revalued assets.
For the gain on the equity investments, it will ordinarily go through P/L …. but you’re getting hung up on half a mark! It’s possibly not even half a mark to place it correctly – the fact that you have reduced the profits for the year by the correct amount could gain you the full mark – I think that it’s POSSIBLE that the markers MAY be instructed to give half for the figure and half for the positioning.
As a default matter I suggest you put such gains through P/L unless the examiner indicates otherwise
OK?
alright mike, thank you. you’re helping me much. appreciate that. :)) do expect for more question from me. as im doing all the past years question atm. 🙂
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