Investment Accounting and Measurement Guide
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Aiah LampitocInvestment Accounting and Measurement Guide
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Aiah LampitocCommon questions
Powered by AIWithin an SME's financial reporting, a translation gain and loss component of OCI is reclassified to profit or loss .
An SME should measure an investment property at either fair value or the cost-depreciation impairment model, using the same accounting policy for all such properties unless reliable measurement of fair value is impracticable; then the cost model is applied .
Under the equity model of full PFRS, the carrying amount is determined by the initial cost of investment, adjusted for the investor's share of the investee's profit or loss and any dividends received. For STOVE CORP, the initial investment was ₱1,000,000. The share of profit is 30% of ₱500,000, which is ₱150,000. Dividends received would be 30% of ₱200,000, totaling ₱60,000. Therefore, the carrying amount is ₱1,000,000 + ₱150,000 - ₱60,000 = ₱1,090,000 .
Under full PFRS, the lower of cost or net realizable value (NRV) method measures inventory. The NRV is calculated as selling price minus estimated cost to complete and selling costs (if any). For markers, NRV is ₱360,000 - ₱48,000 = ₱312,000. The historical cost is ₱240,000. Since the historical cost is lower, the inventory value for markers remains at ₱240,000 .
An SME must recognize a government grant that imposes specified future performance conditions in income only when the performance conditions are met .
The carrying value under full PFRS using the equity method for RADIO CORP includes the initial cost of investment, proportion of net income acknowledged, and any dividends received. Initial investment costs ₱4,500,000. Share of net income, which is 20% of ₱4,000,000, is ₱800,000. Dividends received, which is 20% of ₱3,000,000, are ₱600,000. Therefore, the carrying value is ₱4,500,000 + ₱800,000 - ₱600,000 = ₱4,700,000 .
In the statement of financial position of an SME, a biological asset carried at fair value is not considered a line item, while investments in joint ventures, investment properties at cost, and disposal group assets classified as held for sale are considered .
Under PFRS for SMEs, revaluation surplus from an investee, like DJ CORP, does not impact the investor's (RADIO CORP) carrying amount of the investment in associates accounted by the equity method. For full PFRS, adjustments for the revaluation surplus may be recognized depending on specific circumstances and policies applied .
Fair presentation is presumed to result from compliance with IFRS for SMEs by an entity that does not have public accountability. Thus, such an entity should apply IFRS for SMEs standard principles and, if necessary, provide additional disclosures to ensure fair presentation .
An SME may account for investments in associates using the cost model, equity method, or fair value model after initial recognition, provided the same accounting policy is used for all such investments .