SBR Dec 2019 Invt in Joint venture

RRockk5y ago

I have a doubt in SBR-INT SEPT/DEC 2019 *Investment in Joint venture - Fourdee question* As such, Digiwire Co is required by IAS 28 to limit the profit on disposal of its non-monetary assets to 50% because, effectively, Digiwire has only disposed of 50% of the assets 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 (($6m + $3m carrying amounts derecognised for property and cryptocurrency) + (($4m – $3m)/2) + (($10m – $6m)/2)). A gain of $2.5 million will be recorded in profit or loss. I didn't understand that why do we recognize only 50% of gain? Becuase we should have sold assets for 14$ million and also our joint venture recognized at cost would be 14 $million. Please can someone explain this. Thanks.

stephenwidbergTutor5y ago#1

The apparent profit is 5, as you say. I'm not sure if you watched my debrief. In it I make the point that the prize winner (only) considered that, as the sale was to an entity which is 50% externally owned, then only 50% of profit should be recognised. Similar to PURPs with associates. I suppose the journal would be: Dr Inv in JV - balancing figure Cr P&L 2.5 Cr NCA 7 We are not asked to write up the books of the JV.