Page 413 - F2 Integrated Workbook STUDENT 2019
P. 413
Answers
Example 3.6
Statement of profit or loss and other comprehensive income
Operating profits
$
Gain on financial asset 15,750
Admin cost (1,950)
Statement of financial position
Current assets
FVPL financial asset 110,250
Initial recognition
The financial assets are classified as fair value through profit or loss (FVPL) as
the shares are held for trading purposes. The default position is used.
The transaction costs would be expensed rather than capitalised. Dr profit or
loss 1,950 Cr Cash 1,950. This has been taken to admin costs in the extract
shown.
The asset would be initially recognised at an amount of $94,500 (15,000 × 6.3)
Dr FVPL $94,500 Cr Cash $94,500.
Subsequent treatment
The subsequent treatment of a FVPL financial asset is to revalue to fair value,
with any gains or losses taken to the profit or loss account.
$
Fair value at year end (15,000 × 7.35) 110,250
Carrying amount (94,500)
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Gain shown in profit or loss 15,750
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