Page 28 - PowerPoint Presentation

CHANGES IN DEGREE OF CONTROL

Suggested Solution

If Blue Ltd elected to carry the Investment in Red Ltd at fair

value (IAS 27.10(b)) through OCI instead of at cost in the

separate financial statements of Blue Ltd (while still

subsidiary)

• If Blue Ltd elected to classify this investment as a financial

asset in terms of IFRS 9 Financial Instruments in its

separate financial statements and irrevocably elected to

present subsequent changes in the fair value of the

investment in other comprehensive income in a mark-to-

market reserve instead of measuring the investment at

cost in terms of IAS 27.10(a), the journals for the preferred

approach on date of disposal would be as follows (you can

assume that Blue Ltd elected to transfer any cumulative

gains/losses within equity in terms of IFRS 9.B5.7.1):

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