■ Accounting Treatment of Shares (Trading vs.
Non-Trading)
1. Statement of Financial Position (SOFP)
Format:
ASSETS Non-current assets Property, Plant & Equipment xxx Investments in Equity
(FVOCI) xxx ← Shares not held for trading Current assets Inventories xxx Trade &
Other Receivables xxx Financial Assets at FVTPL xxx ← Shares held for trading Cash &
Cash Equivalents xxx TOTAL ASSETS xxx EQUITY & LIABILITIES Equity Share Capital xxx
Retained Earnings xxx OCI Reserve (FVOCI revaluations) xxx ← Revaluation for
non-trading shares Non-current liabilities xxx Current liabilities Trade & Other
Payables xxx Dividend Payable xxx ← Dividend declared not yet paid Other current
liabilities xxx TOTAL EQUITY & LIABILITIES xxx
2. Statement of Profit or Loss (P/L)
Revenue xxx Cost of Sales (xxx) Gross Profit xxx Other Income Dividend Income xxx ←
Dividend from both trading & non-trading shares Fair Value Gain (Trading shares) xxx
← Unrealized/realized gain on trading shares Other Expenses (xxx) Finance Costs
(xxx) Profit Before Tax xxx Income Tax Expense (xxx) Profit for the Year xxx
3. Statement of Changes in Equity (SCE)
Share Retained OCI Reserve Total Capital Earnings (FVOCI) Equity
----------------------------------------------------------- Opening Balance xxx xxx
xxx xxx Profit for the Year xxx xxx Dividend Declared (xxx) (xxx) FVOCI Gain
(Unrealized) xxx xxx ← Revaluation for non-trading shares Transfer from OCI on
disposal (xxx) --- → May move to Retained Earnings Closing Balance xxx xxx xxx xxx
4. Profit Before Tax (PBT) Note
Profit Before Tax is stated after including: Dividend income (all shares) xxx Fair
value gain/loss (trading shares) xxx Impairment loss (non-trading shares) xxx Other
operating income/expenses xxx
5. Dividend Treatment (Visualized in Statements)
- Dividend declared & received → Income in P/L, asset in SOFP (if receivable).
- Dividend declared but not paid (as issuer) → Liability in SOFP (Dividend Payable), deduction from
Retained Earnings in SCE.
- Dividend paid (as issuer) → Cash outflow in SOFP, deduction from Retained Earnings in SCE.
6. Summary Table
Transaction Held for Trading (FVTPL) Not Held for Trading (FVOCI)
Initial Recognition SOFP – Current Asset SOFP – Non-current Asset
Revaluation Gain/Loss P/L – Other Income/Expense OCI – Equity Reserve in SCE
Disposal Gain/Loss P/L P/L (+ transfer from OCI)
Dividend Received P/L – Dividend Income P/L – Dividend Income
Dividend Declared but not Paid SOFP – Dividend Receivable Same Treatment
Issuer– Dividend Payable / Cash + SCE Retained Earnings ↓ Same Treatment
Dividend Declared bySOFP
Impact on PBT Dividend + FV Gains/Losses Dividend + Impairment only