Hi Mike
Q. A financial asset is measured at amortised cost in the statement of profit and loss but is held at fair value in the statement of financial position. The asset, which had a nominal value of $10m and a coupon rate interest of 4% was purchased for its fair value of $9m at the start of the financial year. The effective rate of interest is 8%. The Fair value of the asset at the reporting date is $11m
Requirement:
In relation to the above- explain how it will be adopted under the narrow approach under gains and losses that can be included in OCI
I have set up an amortised table so I have done
b/f F/C (85) Coupoun ( 4%NPV- 0.9615) c/f
9 0.72 9.165m 105,000
Is this correct if yes what do i do after that- I mean how is it treated within OCI?
Q2. Land,accounted for as property, plant and equipment, was purchased at the start of the reporting period for $5m. sleeper holds land at fair value. its fair value at the reporting date was deemed to be $5,5m.
Again under the narrow approach - to gains and losses in OCI how will this be treated?
I assume it is a gain so will go through the OCI would it?