Question

Votivo had the following securities that were acquired in Year X1: Security Type Classification Cost Fair...

Votivo had the following securities that were acquired in Year X1:

Security Type

Classification

Cost

Fair Value at

12/31/X1

Fair Value at

12/31/X2

Stock A                  12,000                    9,000                  10,200
Stock B                    5,500                    7,500                    7,000
Bond A (Trading Security)                    7,200                    8,500                    8,000
Bond B (Available for Sale)                  16,500                  15,700                  15,500
Bond C (Held to Maturity)                    6,600                  10,575                  11,350

Assume the investments in stock represent less than 20% control of the company. The reported value on the 12/31/X1 Balance Sheet will total?

Assume the investments in stock represent less than 20% control of the company. What is the amount of the unrealized gain (loss) recorded as Other Comprehensive Income in the 12/31/X1 Statement of Comprehensive Income?

Assume the investments in stock represent less than 20% control of the company. What is the amount of the unrealized gain (loss) recorded on the 12/31/X2 Income Statement?

Homework Answers

Answer #1

For Stock A & Stock B

All equity investments in scope of IFRS 9 are measured at fair value in the statement of financial position, with value changes recognised in profit or loss, except for those equity investments for which the entity has elected to present value changes in other comprehensive income

As on 12/31/X1
Particular Amount (Rs) Amount (Rs)
Stock A 12000
Stock B 5500
A. Total Carrying Value 17500
B. Total Fair Value as on
12/31/X1
16500
I. Unrealised Loss ( B - A) -1000
Bond
A. Held for Trading (Carrying Value) 7200
B.Total Fair Value as on
12/31/X1
8500
II. Unrealised Gain ( B - A) 1300

Net Unrealised gain to be recorded in Other Comprehensive Income

( I+ II )

300
As on 12/31/X2
Particular Amount (Rs) Amount (Rs)
Carrying Value as on 12/31/X2
Stock A 9000
Stock B 7500
A. Total Carrying Value 16500
B. Total Fair Value as on
12/31/X2
17200
I. Unrealised Loss ( B - A) 700
Bond
A. Held for Trading 8500
B. Total Fair Value as on
12/31/X2
8000
II. Unrealised Gain ( B - A ) -500

Net Unrealised gain to be recorded in Other Comprehensive Income

( I + II )

200

Securities held for Maturity will be recorded at Cost hence No Effect has been Given.

Sucurities Available for Sale are recognised directly in equity, through the statement of changes in equity,

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