Page 437 - SBR Integrated Workbook STUDENT S18-J19
P. 437
Answers
Example 5
Investments in shares
Fair value through other comprehensive income
The financial asset will be initially recognised at its fair value plus fees:
Dr Financial asset ((1m × $5) + $0.1m) $5.1m
Cr Cash $5.1m
The financial asset will be revalued at year end to its fair value of $5.5 million
(1m × $5.50) with the gain of $0.4 million recorded in other comprehensive
income:
Dr Financial asset $0.4m
Cr OCI $0.4m
Fair value through profit or loss
If no designation is made then the financial asset will be measured at fair
value through profit or loss. It will be initially recognised at its fair value of $5
million. The fees are expensed to profit or loss
Dr Financial asset $5.0m
Dr Profit or loss $0.1m
Cr Cash $5.1m
The financial asset will be revalued at year end to its fair value of $5.5 million
(1m × $5.50) with the gain of $0.5 million recorded in profit or loss:
Dr Financial asset $0.5m
Cr Profit or loss $0.5m
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