Page 29 - 2018 Finac2 Test 3 Slides - Change In Degree Of Control
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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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