OCI

Q JUNE 2012
SOFP
assets
INvestment in Hail 55.
(i) On 1 June 2010, Robby acquired 80% of the equity interests of Hail. The purchase consideration comprised
cash of $50 million. Robby has treated the investment in Hail at fair value through other comprehensive income
(OCI).
A dividend received from Hail on 1 January 2012 of $2 million has similarly been credited to OCI.
It is Robby’s policy to measure the non-controlling interest at fair value and this was $15 million on 1 June 2010.
On 1 June 2010, the fair value of the identifiable net assets of Hail were $60 million and the retained earnings
of Hail were $16 million. The excess of the fair value of the net assets is due to an increase in the value of
non-depreciable
WORKING
Hail
$m
Fair value of consideration for 80% interest 50·00
Fair value of non-controlling interest 15·00

Fair value of identifiable net assets acquired (60·00)
–––––– Goodwill 5·00
On consolidation, there will be a reversal of the fair value adjustments to the investment held at fair value through profit and LOSS.
Therefore the adjustments required are:
Dr Other comprehensive income 5·00
Cr Investment in Hail 5·00
I have copied the solution above .I dont understand Y there is a reversal of fair value adjustment ,secondly when investment was kept on OCI then the change in Fairvalue should also be recoreded there .but in solution it has been deducted.