Page 417 - F2 Integrated Workbook STUDENT 2019

Answers

Example 3.10

An acquisition of debentures represents a DEBT financial asset.

Lucas’ business model is to trade in the short term. The financial asset is
classified as FVPL.

Initial recognition would be at fair value. Any transaction costs will be an
expense within the statement of profit or loss. Subsequent treatment is to
revalue to fair value, gains or losses to profit or loss.

Statement of profit or loss and other comprehensive income (SOPLOCI)

Year 20X1
$

Gain on revaluation of FVPL financial 1,000
asset (W1)

Investment income (W2) 1,000

Statement of financial position (SFP)

Year 20X1
$

Non-current assets
Financial assets 11,000

(W1) Gain on revaluation of FVPL financial asset

Fair value 11,000

Carrying amount (10,000)
––––––

Gain to profit or loss 1,000

(W2) Investment income

In the year-ended 31 December 20X1, interest income of $10,000 × 10% = $1,000
will be received in cash and recognised within profit or loss.

409