Page 389 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

Example 3.4

Statement of profit or loss and other comprehensive income

$
Other comprehensive income

Gain on available for sale financial asset 13,800

Statement of financial position

Non-current assets $

Financial assets 110,250

Equity

AFS reserve 13,800

Initial recognition

The financial asset would be classified as available for sale due to the intention
to hold for the long term.

The transaction costs would be capitalised and added to the financial asset.

The asset would be initially recognised at an amount of $96,450. Dr AFS
financial asset 96,450 Cr Cash 96,450.

$

Initial cost (15,000 × 6.3) 94,500
Transaction costs 1,950
–––––––

96,450
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Workings continued overleaf

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