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Hi
First of all I would like to thanks you
I have question regarding Parent’s profit on a deemed disposalFair value of existing holding at date of obtaining control X
Less carrying value of existing holding (X)
Profit on deemed disposal XWhat is meant by carrying value is it the cost of invesment or cost of investment + its share of retained earnings up to the date of obtaining control.
Also, does it make any different if the acquired subsisiary was an associste or an investment in equity through P/L or OCI while calculating the carrying value.
Thanks
Hi,
Thanks for the kind comments. It’s always a pleasure to help out and give you the best possible chance of success.
The carrying value you refer to depends on how the entity is currently treated in the accounts. If we have no influence over the entity then it is a simple trade investment and we use the cost of the investment in the calculation.
If we have influence over the entity then it will be an associate and accounted for using equity accounting. The carrying value will be the value of the investment in associate (cost + %post-acquisition).
Any gain or loss goes through profit or loss. If however it is a simple investment that we held and it was measured using FVTOCI then any gains/losses are transferred to profit or loss.
Hope this helps.
Thanks
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