Question 3 (b ii) SBR Sep/Dec 2019

Dear Sir, Could you please explain the limit to 50% on disposal? And Where is it mentioned in IAS 28? When a joint venturer contributes a non-monetary asset to a joint venture in exchange for an equity interest in the joint venture, the joint venturer recognises a portion of the gain or loss on disposal which is attributable to the other parties to the joint venture (except when the contribution lacks commercial substance). Essentially, Digiwire Co is required by IAS 28 to limit the profit on disposal of its non-monetary assets to 50%. Effectively, Digiwire has only disposed of 50% of the asset contributed to the joint venture. Thus the carrying amount of the joint venture in Digwire’s financial statements at 31 December 20X6 will be $11·5 million (($6 + $3 carrying amounts derecognised for property and cryptocurrency) + ((4 – 3)/2) + ((10 – 6)/2)). A gain of $2·5 million will be recorded in profit or loss. Thank you a lot.