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Hi,
Here’s a quote from an acca technical article:
‘A revaluation surplus on a financial asset classified as FVTOCI is a good example of a bridging gain. The asset is accounted for at fair value on the statement of financial position but effectively at cost in P/L. As such, by recognising the revaluation surplus in OCI, the OCI is acting as a bridge between the statement of financial position and the P/L.’
I don’t understand what is meant by saying the asset is effectively accounted for at cost in P/L – how has it had anything to do with the P/L when gains and losses go through OCI?Thanks
Hi,
Where’s the article please? Reading the extract in isolation doesn’t lead me to any answers straight away and like you I can’t see where it is talking about the profit or loss at cost impact.
Thanks
Sorry, here is the link
https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p2/technical-articles/pl-oci.htmlthe bit I quoted is in the section near the end titled Narrow approach to the OCI
Thank you
Good article!
It is essentially saying that even though the gains/losses go through OCI any dividends received would go through profit or loss, which is as it would be even if it was as FVTPL or just held at cost in the SFP.
Glad to see you your reading the articles and hopefully it will serve you well come the final exam this week.
Thanks
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