acc515 chapt#9 sol. & extras

8/20/2019 ACC515 Chapt#9 Sol. & Extras

1/73

EXERCISE 9-1 (25-30 minutes)

(a)ASPE (b)IFRS (IAS 39) (c)IFRS (IFRS 9)1 Fair vaue t!r"u#! net

inc"me (F$-%I)securit& since t!ec"m'an&s intent is t"

mana#e t!e c!an#in#air vaues an* se t!eb"n*s as s""n as t!evaue increases+ Fairvaue "'ti"n ,"u* bea''ie*+

Fair vaue t!r"u#! netinc"me (F$-%I)securit& since t!is is!e* "r tra*in#+

Fair vaue t!r"u#! netinc"me (F$-%I)securit& since t!ec"m'an&s intent is t"

mana#e t!e c!an#in#air vaues an* set!e b"n*s as s""n ast!e vaue increases+

2 I n" active maret'rices are avaiabe "r Farm C"r'+. t!en atc"st/ i active maret'rices are avaiabe.t!en at F$-%I+ !is ,ibe reassesse* i an*

,!en a m"resi#niicant !"*in# isac!ieve*+

!ere is a c!"icebet,een F$-%I an* F$-CI !ere+ana#ement ,"u*'r"bab& c!""se t!eF$-CI met!"*because " t!e "n#er

term strate#ic'ur'"se "r t!isinvestment+ !is,"u* be cassiie* asavaiabe-"r-sae(even t!"u#! t!es!ares ,ere n"tacuire* "r sae4)+

Fair vaue t!r"u#!"t!er c"m're!ensiveinc"me (F$-CI)securit&+ !en t!ec"m'an& acuires206 "r m"re. t!einvestment ,i be

recassiie* t" aneuit& investment isi#niicant inuence"ver Farm C"r'+e7ists+

3 Am"rti8e* c"st.uness t!e c"m'an&c!""ses t!e air vauet!r"u#! net inc"me(F$-%I) m"*e "'ti"n+it! suc! a s!"rtmaturit&. its c"st 'usaccrue* interest ,ibe re'resentative "F$ in an& case+

!e air vaue t!r"u#!net inc"me (F$-%I)met!"* is t!e bestc!"ice. at!"u#! t!einvestments c"st 'usaccrue* interest isre'resentative " itsair vaue+

!e air vaue t!r"u#!net inc"me (F$-%I)met!"* is t!e bestc!"ice. at!"u#! t!einvestments c"st'us accrue* interestis re'resentative "its air vaue+


2/73

EXERCISE 9-1 (C"ntinue*)

(a)ASPE (b)IFRS (IAS 39) (c)IFRS (IFRS 9) Am"rti8e* c"st s!"u*

be use* uness t!eintent is t" mana#e t!em"r ca'ita a''reciati"n"r tra*in#+ I t!e atter.

t!en c!""se t!e airvaue t!r"u#! netinc"me (F$-%I) met!"*+(Private entit& :AAP*"es n"t !ave an F$-CI"'ti"n+)

;n*er IAS 39. t!isinvestment cann"t becassiie* as !e* t"maturit& usin# t!eam"rti8e* c"st

a''r"ac!+ !e F$-%I"'ti"n (!e* "rtra*in#) is ie& t" bec!"sen+

A assets are "'ent" bein# s"* i cas!is nee*e*+ I t!eentit& *"es mana#et!e b"n*s "r t!eir

cas! ",s "'rinci'a an*interest. t!enam"rti8e* c"sts!"u* be use*+!e& are n"t bein#!e* as tra*in#securities. s" F$-%Iis n"t a''r"'riate+(;n*er 'r"'"se*IFRS 9. F$-CIinvestmentsn"rma& ,i be

imite* t" euit&investments in "t!er c"m'anies+)

5 Am"rti8e* c"st a''earst" be t!e best c!"ice!ere base* "n t!e'ur'"se " t!einvestment+

it! an intent an*ca'abiit& " !"*in#t!is investment t"maturit&. t!e entit&,"u* ie& c!""set!e am"rti8e* c"sta''r"ac!+

Am"rti8e* c"stmet!"* as t!ec"m'an&s intent ist" mana#e t!estate* cas! ",san* !"* t!e b"n*sunti maturit&+

< Fair vaue t!r"u#! netinc"me (F$-%I) assumin#t!at t!e euit&

investment is u"te* inan active maret an*mana#e* base* "n its*ivi*en* &ie* "n maretvaue+ I n"t u"te* in anactive maret. t!en t!ec"st met!"* s!"u* beuse*+

Fair vaue t!r"u#!CI (avaiabe "rsae)+ ana#ement is

m"st intereste* in t!e&ie* earne* "n t!emaret vaue " t!es!ares ,!ic! ,"u*", t!r"u#! netinc"me. but t!e intentis t" !"* t!einvestment "r t!e"n# term rat!er t!anc"nvert it t" cas! int!e s!"rt "r me*iumterm+ !e F$ c!an#es,"u* be better #"in#t!r"u#! CIt!ere"re+

F$-%I uness t!ec"m'an& c!""sest" use F$-CI

(,!ic! t!e& area",e* t" *" as anacc"untin# '"ic&c!"ice)+ Since t!es!ares are n"t !e*"r tra*in#. it mi#!tn"t mae sense t"incu*e t!em in t!eF$-%I cate#"r&+


(a)ASPE (b)IFRS (IAS 39) (c)IFRS (IFRS 9)= !e F$ " t!e s!ares is

n"t ie& a act"r/ t!e&are !e* "n& t" 'ermitbusiness t" be

>ecause t!e s!aresare n"t !e* "r cas!",s c"nsistin# "'rinci'a an* interest.

>ecause t!e s!aresare n"t !e* "r cas!",s c"nsistin# "'rinci'a an*


3/73

c"n*ucte*+ !e c"stmet!"* is t!e bestc!"ice as t!e s!ares aren"t !e* "r '"ssibec"nversi"n t" cas!+

t!e s!ares s!"u* beair vaue*+ Sincet!e& are !e* "r"n#er term strate#ic'ur'"ses. t!e entit&,"u* 'r"bab&c!""se t!e F$-CIa''r"ac!. t!at isavaiabe "r sae+

interest. t!e s!aress!"u* be airvaue*+ Since t!e&are !e* "r "n#erterm strate#ic'ur'"ses. t!e entit&,"u* 'r"bab&c!""se t!e F$-CIa''r"ac!+


4/73


(a) ?anuar& 1. 201>"n* Investment at Am"rti8e* C"st+++++++++++ 300.000

Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++ 300.000

(b) @ecember 31. 201Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 30.000

Interest Inc"me++++++++++++++++++++++++++++++++++++++ 30.000

(c) @ecember 31. 2015Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 30.000

Interest Inc"me++++++++++++++++++++++++++++++++++++++ 30.000

(*) ?anuar& 1. 2019Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 300.000

>"n* Investment at Am"rti8e* C"st+ + + 300.000


5/73


(a) ?anuar& 1. 201>"n* Investment at Am"rti8e* C"st++++++ 53=.90=+0

Cas!++++++++++++++++++++++++++++++++++++++++++++++++++ 53=.90=+0

Sc!e*ue " Interest Inc"mean* >"n* Premium Am"rti8ati"nEective Interest et!"*

126 >"n*s S"* t" ie* 106

@ateCas!

Receive*InterestInc"me

PremiumAm"rti-8ati"n

Carr&in#Am"unt" >"n*s

01B01B112B31B112B31B1512B31B1<12B31B1=12B31B1

D


6/73

%umber " interest 'eri"*s 5Premium t" be am"rti8e* eac! &earJ

3=.90=+0 K 5 =.51+

Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++"n* Investment at Am"rti8e* C"st+ + + =.51+ Interest Inc"me++++++++++++++++++++++++++++++++++++++ 52.1+52

"ta interest inc"me. eective interest met!"*Part (b) ab"veJ 2


7/73

EXERCISE 9- (20-25 minutes)

(a) Sc!e*ue " Interest Inc"mean* >"n* @isc"unt Am"rti8ati"n

Eective Interest et!"*96 >"n* Purc!ase* t" ie* 126

@ateCas!


>"n*@isc"unt

Am"rti8ati"n

Carr&in#Am"unt

" >"n*s

01B01B112B31B112B31B1512B31B1<

D2=.000

2=.0002=.000

D33.0"n* Investment at Am"rti8e* C"st+++++ .03<

Interest Inc"me+++++++++++++++++++++++++++++++ 35.03<

Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 300.000>"n* Investment at Am"rti8e* C"st 300.000

Aternative&. t!e entries c"u* be c"mbine* in "nec"m'"un* entr&J

Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 32=.000Interest Inc"me+++++++++++++++++++++++++++++++ 35.03<

>"n* Investment at Am"rti8e* C"st 291.9


8/73

EXERCISE 9- (C"ntinue*)

Cas! LLLLLLLLLLLLLLL 25.2=0M"ss "n Sae " Investments LLL++


9/73


(a)

F$-%I Investments LLLLLLLL++ 53=.90=+0

Cas! LLLLLLLLLLLL++ 53=.90=+0

(b)

@ecember 31. 201

Cas! LLLLLLLLLLLLLL++


10/73


@ecember 31. 201<

Cas! LLLLLLLLLLLLLL++


11/73


12/73

EXERCISE 9-< (C"ntinue*)

@ecember 1

Cas! LLLLLLLLLLLLLL++ 9.000

Interest Receivabe LLLLLL =50

Investment Inc"me "r M"ss LL .250

200.000 X 96 X


13/73

Interest Inc"me LLLLL++LL+ 5.000

300.000 X 106 X "n* Investment at Am"rti8e* C"st ++ 200.000

Interest Receivabe LLLLLLLL+ =50

Cas! LLLLLLLLLLLL++ 200.=50200.000 X 96 X O B12 =50

Au#ust 31

Cas! LLLLLLLLLLLLLLL "n* Investment at Am"rti8e*

C"st


14/73

(c)

!en an entit& mana#es its investments "n t!e basis " &ie* t" maturit&. it

means mana#ement inten*s t" !"* t!e b"n*s unti t!e& mature+ !eir business

'ans incu*e t!e cas! ",s r"m interest recei'ts an* t!e 'rinci'a ,!en t!e

b"n* matures+

!e b"n*s are acuire* at a 'rice t" &ie* a s'eciic rate an* it is t!is rate "interest t!at mana#ement e7'ects t" re'"rt "n t!e inc"me statement eac!

'eri"*+

>ecause mana#ement *"es n"t inten* t" tra*e t!ese b"n*s in t!e maret.

remeasurin# t!em t" t!eir air vaue at eac! re'"rtin# *ate is n"t reevant

in"rmati"n t" users " t!e inancia statements+


15/73

EXERCISE 9-= (10-15)

(a)

Investment Inc"me "r M"ss 1.00

F$-%I Investments 1.00

(50.000 G .


16/73

EXERCISE 9- (25-30 minutes)

(a)Au#ust 31. 2013


Interest Receivabe (100.000 X 96 X 10B12) =.500

Cas! 111.990

%"vember 1. 2013

Cas! 9.000

Interest Receivabe =.500


@ecember 31. 2013

Interest Receivabe (100.000 X 96 X 2B12) 1.500




(10.90 G 103.200)

?anuar& 15. 201

Cas! Cas 10.==5

Investment Inc"me "r M"ss =5Interest Receivabe 1.500


Investment inc"meJ 3=5 - 300 =5

Sein# Price " b"n*s 102.900Interest since ast interest 'a&ment

(100.000 X 96 X 2+5B12) 1.=5Cas! receive* r"m 'urc!aser 10.==5

Interest since ast interest 'a&ment 1.=5Interest accrue* at @ecember 31 1.500A**iti"na interest accrue* t" *ate " sae 3=5


17/73


Sein# 'rice " b"n*s 102.900Carr&in# am"unt " b"n*s 103.200N"*in# "ss "n sae " b"n* 300

F"r 2013. t!e number " m"nt!s t!e b"n* ,as !e* isJ Au#ust 31 t"

@ecember 31 m"nt!s+ !e am"unt " interest earne* an* re'"rte* "n t!einc"me statement s!"u* be 100.000 X 96 X B12 3.000+

!e am"unt actua& re'"rte* is (1.500 1.500 G 1.290 1.=10)+ !e*ierence is cause* b& t!e air vaue a*Hustment " 1.290 at &ear-en*+ !eInvestment Inc"me "r M"ss acc"unt incu*es b"t! interest inc"me an* airvaue a*Hustments+

(c) IFRS = Financial Instruments: Disclosures in*icates in 'ara#ra'! >5(e) t!atentities ma& *isc"se ,!et!er t!e net #ains "r "sses "n inancia assetsmeasure* at air vaue t!r"u#! 'r"it "r "ss (i+e+. F$-%I) an* re'"rte* "nt!e inc"me statement incu*e interest an* *ivi*en* inc"me+ Private entit&:AAP. "n t!e "t!er !an*. reuires se'arate re'"rtin# " interest inc"mean* net #ains "r "sses rec"#ni8e* "n inancia instruments (CICAHandbook, Part II, Accounting Standards for Private Enterprises. Secti"n35


18/73


;nreai8e* "ss at @ec+ 31. 2013 1.290

Reai8e* "ss rec"r*e* ?an+ 201 300

1.590

%et inc"me "vera 1.=5

Aternative&J

Cas! "utJAu#ust 31. 2013 111.990

Cas! inJ %"vember 1. 2013 9.000

?anuar& 15. 201 10.==5 113.==5

%et '"sitive return 1.=5

!is return re'resents a +5


19/73


(a)



(311.500 G 305.


20/73


(a) F$-%I Investments+++++++++++++++++++++++++++++++++++++++ 3.000Investment Inc"me "r M"ss++++++++++++++++ 3.000

(b) F$-CI Investments++++++++++++++++++++++++++++++++++++ 3.000;nreai8e* :ain "r M"ss- CI+++++++++++++ 3.000

%"teJ Eac! investment c"u* as" be a*Huste* se'arate&+

!e !"*in# #ain "n t!e investments acc"unte* "r usin# t!e air vaue t!r"u#!net inc"me (F$-%I) m"*e is re'"rte* as 'art " investment inc"meB"ss in t!einc"me statement un*er t!er Revenues an* :ains. an* t!is acc"unt issubseuent& c"se* "ut t" retaine* earnin#s at t!e en* " t!e 'eri"*+ !e!"*in# #ain "r "ss "r investments acc"unte* "r usin# t!e air vaue t!r"u#!"t!er c"m're!ensive inc"me (F$-CI) m"*e is re'"rte* as a 'art " "t!erc"m're!ensive inc"me an* is c"se* "ut t" accumuate* "t!er c"m're!ensiveinc"me (ACI) at t!e en* " t!e 'eri"*+ >"t! t!e F$-CI an* F$-%I securities are

re'"rte* at air vaue "n t!e baance s!eet+

!e acc"untin# "r F$-%I investments an* F$-CI investments un*er IAS 39 an*IFRS 9 is ver& simiar reative t" t!e entries ab"ve+ N",ever. IFRS 9 *"es n"t uset!e F$-CI as a *eaut cate#"r& as IAS 39 *"es. but instea* restricts ,!ic!euit& investments s!"u* be cassiie* as suc!+


21/73


(a) ?anuar& 15. 201F$-%I Investments (9.000 X 33+50)++++++++++++++ 301.500Investment Inc"me "r M"ss++++++++++++++++++++++++++ 1.90

Cas!++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 303.0

A'ri 1. 201F$-%I Investments (5.000 X 52+00)++++++++++++++ 2


22/73

!e 'urc!ase entries ,i beJ

?anuar& 15. 201F$-CI Investments+++++++++++++++++++++++++++++++++++++++ 303.0

Cas!++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 303.0

A'ri 1. 201F$-CI Investments+++++++++++++++++++++++++++++++++++++++ 2


23/73


@ecember 31. 201;nreai8e* :ain "r M"ss - CI++++++++++++++++++++++ 3.100

F$-CI Investments+++++++++++++++++++++++++++++++ 3.100

%"teJ It ,"u* as" be a''r"'riate t" mae se'arate entries "r eac! investment+

S!aresCarr&in#Am"unt

Fair $aue

;nreai8e*:ain

(M"ss)

%irmaa C"r'+.


24/73


(a) @ecember 31. 201;nreai8e* :ain "r M"ss - CI+++++++++++++++++++ 3.


25/73


Retaine* Earnin#s++++++++++++++++++++++++++++++++++++++++++ 21.900;nreai8e* :ain "r M"ss - CI+++++++++++++++ 21.900

(1=5.200 c"st ess 153.300 cas! 'r"cee*s "n sae 21.900 "sstranserre* "ut " ACI *irect& t" Retaine* Earnin#s)

?une 2015Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 1.300

@ivi*en* Revenue+++++++++++++++++++++++++++++++++++ 1.300

(e) @ecember 31. 2015

InvestmentsCarr&in#Am"unt Fair $aue

N"*in#:ain (M"ss)

>urn!am C"r'+ s!ares 10.


26/73


(a)@ecember 31. 201

F$-CI Investments++++++++++++++++++++++++++++++++++++++++ 1.50;nreai8e* :ain "r M"ss - CI++++++++++++ 1.50

@ecember 31. 2015;nreai8e* :ain "r M"ss - CI+++++++++++++++++++++++ 9.550

F$-CI Investments +++++++++++++++++++++++++++++++ 9.550

@ecember 31. 201<F$-CI Investments++++++++++++++++++++++++++++++++++++++++ .200

;nreai8e* :ain "r M"ss - CI+++++++++++++++ .200

(b)

@ec+ 31B1 @ec+ 31B15 @ec+ 31B1<Fair vaue " F$-CIinvestments 1.=50 32.200 3aance in accumuate*"t!er c"m're!ensiveinc"me 1.50 (=.=00) (3.500)

Pr"" " baanceJEntr&. @ec+ 31B1Entr&. @ec+ 31B15Entr&. @ec+ 31B1<

>aance at &ear en*

1.50 -0- -0-

1.50

1.50( 9.550)

-0-

( =.=00)

1.50( 9.550) +200

( 3.500)


27/73


(c)Februar& 13. 201=

F$-CI Investments+++++++++++++++++++++++++++++++++++++++++++ 1.


28/73


C"st F$-%I F$-CI(1) @ebi

tCre*it

@ebit Cre*it @ebit Cre*it

Cas! .500 .500 .500 @ivi*en* Revenue .500 .500 .500

(5.000 X 0+90)

(2)

15+50 X 5.000

==.500 -


29/73


(b)

C"st F$-%I F$-CI(i)

Eect "n t"ta

assets. @ec+ 31B1

Investments

Cas!


30/73

a''r"ac! ,it!"ut rec&cin#. t!e #ain is rec"#ni8e* "n& in c"m're!ensiveinc"me. never in net inc"me+ (I t!ere is rec&cin#. !",ever. t!e u reai8e* #ain" 1


31/73


(a)(1) @ecember 31. 201 entr&J

M"ss "n Im'airment+++++++++++++++++++++++++++++++++++++++++ 50.500>"n* Investment at Am"rti8e* C"st++++++++++ 50.500 (=.000 G =3=.500)

;n*er ASPE. t!e carr&in# am"unt is re*uce* t" t!e !i#!er " t!e *isc"unte*cas! ", usin# a current maret rate "r t!e b"n*s net reai8abe vaue+ !isatter am"unt is n"t 'r"vi*e* in t!is situati"n+

(2) @ecember 31. 2015 entr&J>"n* Investment at Am"rti8e* C"st LLL++ 1.500

Rec"ver& " M"ss r"m Im'airment+++++++++++ 1.500 (=


32/73


(2) @ecember 31. 2015 entr&J>"n* Investment at Am"rti8e* C"st LLL++ 1.500

Rec"ver& " M"ss r"m Im'airment+++++++++++ 1.500 (=


33/73

EXERCISE 9-1< (30-35 minutes)

(a)

>"n* Am"rti8ati"n abe

@ate

(126)Cas!

Receive*

(106)Interest

Inc"me

PremiumAm"rti-

8ati"n

Carr&in#Am"unt

" >"n*s01B01B1212B31B1212B31B1312B31B112B31B15

D3


34/73

EXERCISE 9-1< (C"ntinue*)

(b)

@ecember 31. 2013

Cas! 3


35/73


(c)

@ecember 31. 2015

Cas! LLLLLLLLLLLLLL+ 3


36/73


(*)Parts (a) t" (c) use a air vaue im'airment m"*e+ !at is. because t!einvestments are re-measure* t" t!eir F$ at eac! &ear en*. t!ere is n" nee* t"cacuate a se'arate im'airment "ss "r rec"ver&+ I am""* !a* acc"unte* "r

t!is investment at am"rti8e* c"st. t!e im'airment m"*e ,"u* c!an#e t" anincurre* "ss m"*e+ !en t!ere is "bHective evi*ence t!at t!e e7'ecte* uturecas! ",s !ave been si#niicant& re*uce*. an im'airment "ss is measure* an*rec"#ni8e* as "",sJ

1+ IFRS an* IAS 39+ !e "ss is measure* as t!e *ierence bet,een t!ecarr&in# am"unt an* t!e 'resent vaue " t!e revise* e7'ecte* cas! ",s.*isc"unte* at t!e !ist"ric *isc"unt rate+

2+ IFRS an* IFRS 9+ !e "ss is measure* as t!e *ierence bet,een t!ecarr&in# am"unt an* t!e 'resent vaue " t!e revise* e7'ecte* cas! ",s.

*isc"unte* at t!e !ist"ric *isc"unt rate+3+ ASPE+ !e "ss is measure* as t!e *ierence bet,een t!e carr&in# am"unt

an* !i#!er " t!e 'resent vaue " t!e revise* e7'ecte* cas! ",s.*isc"unte* at t!e current maret *isc"unt rate an* t!e estimate* netreai8abe vaue " t!e investment+

In a cases. t!e im'airment "sses are 'ermitte* t" be reverse* i t!einvestment vaues increase+


37/73

EXERCISE 9-1= (35-0 minutes)

(a)

In Situati"n 1. IFRS an* IAS 39 ,"u* use t!e incurre* "ss m"*e

In Situati"n 2. IFRS an* IAS 39 ,"u* use t!e air vaue im'airment m"*e

In Situati"n 3. IFRS an* IAS 39 ,"u* use t!e incurre* "ss m"*e

(b)

IAS !: Situation "

@ecember 31. 2013%" entr& as t!ere ,as n" tri##er "r "ss event in 2013+

@ecember 31. 201M"ss "n Im'airment++++++++++++++++++++++++++++++++++++++++++++ 1=.50

t!er Investments+++++++++++++++++++++++++++++++++++++++ 1=.50 (29.50 - 12.00)

IAS !: Situation # @ecember 31. 2013

;nreai8e* :ain "r M"ss+++++++++++++++++++++++++++++++++++++ 2.500 F$-%I Investments+++++++++++++++++++++++++++++++++++++++ 2.500 (29+00 - 2


38/73

im'airment "sses must be transerre* t" net inc"me un*er IAS 39. ,!ereas F$a*Hustments sta& in CI an* ACI+First G rec"#ni8e t!e F$ c!an#e in t!e &earJ

;nreai8e* :ain "r M"ss - CI+++++++++++++++++++++++++++ 13.


39/73

EXERCISE 9-1= (C"ntinue*)

(c) ASPE: Situation " $ incurred loss model

@ecember 31. 2013

%" entr& as t!ere ,as n" tri##er "r "ss event in 2013+

@ecember 31. 201M"ss "n Im'airment++++++++++++++++++++++++++++++++++++++++++++ 1=.50

t!er Investments+++++++++++++++++++++++++++++++++++++++ 1=.50 (29.50 - 12.00)

ASPE: Situation # $ fair value impairment model @ecember 31. 2013

;nreai8e* :ain "r M"ss+++++++++++++++++++++++++++++++++++++ 2.500

F$-%I Investments+++++++++++++++++++++++++++++++++++++++ 2.500

(29+00 - 2


40/73


(a)I %a*a C"r'"rati"ns s!ares are u"te* in an active maret. N"mes is reuire*t" a''& t!e F$-%I met!"* t" acc"unt "r its investment+ I %a*as s!ares are n"tu"te* in an active maret. t!e c"st met!"* is reuire*+ N",ever. in t!is case.

N"mes c"u* eect t" use t!e F$-%I met!"*+

F$-%I met!"*J?anuar& 3. 201

F$-%I Investments+++++++++++++++++++++++++++++++++++++++++++++++ 135.000Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 135.000

(30.000 X 306) 9.000 s!ares X 15

Se'tember 21. 201Cas! (39.000 X 306) ++++++++++++++++++++++++++++++++++++++++ 11.=00

@ivi*en* Revenue+++++++++++++++++++++++++++++++++++++++ 11.=00

@ecember 31. 201;nreai8e* :ain "r M"ss+++++++++++++++++++++++++++++++++++++ 2.250

F$-%I Investments+++++++++++++++++++++++++++++++++++++++ 2.250F$ (9.000 s!ares X 1+=5) 132.=50Carr&in# am"unt 135.000A*Hustment reuire* ( 2.250)

C"st met!"*J?anuar& 3. 201

t!er Investments++++++++++++++++++++++++++++++++++++++++++++++ 135.000Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 135.000

(30.000 X 306) 9.000 s!ares X 15

Se'tember 21. 201Cas!(39.000 X 306) +++++++++++++++++++++++++++++++++++++++++ 11.=00

@ivi*en* Revenue+++++++++++++++++++++++++++++++++++++++ 11.=00


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@ecember 31. 201%" entr& reuire*+

(b)

Euit& met!"*J?anuar& 3. 201

Si#niicant Inuence Investments+++++++++++++++++++++ 135.000Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 135.000

(30.000 X 306) 9.000 s!ares X 15

Se'tember 21. 201Cas!(39.000 X 306) +++++++++++++++++++++++++++++++++++++++++ 11.=00

Si#niicant Inuence Investments+++++++++++++ 11.=00

@ecember 31. 201Si#niicant Inuence Investments+++++++++++++++++++++ 25.500

Investment Inc"me "r M"ss++++++++++++++++++++++++ 25.500(5.000 X 306)

(c)

Even t!"u#! N"mes !as si#niicant inuence "ver t!e "'erati"ns " %a*a

C"r'"rati"n. ASPE a",s t!e invest"r t" c!""se t!e c"st met!"* instea* " t!eeuit& met!"*+ N",ever. i %a*as s!ares are active& tra*e* in t!e maret. t!ec"st met!"* cann"t be use* an* t!e F$-%I met!"* is t!e "n& "'ti"n t" t!eeuit& met!"*+


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(*)

A inancia ana&st is intereste* in assessin# t!e current 'er"rmance " t!einvest"r c"m'an& mana#ement an* ,!at t!e c"m'an&s 'r"s'ects are "r t!e

uture+ !e ana&st is intereste* in t!e abiit& " t!e invest"r c"m'an& t"#enerate cas! ",s t!at ,i be re'icate* in uture 'eri"*s+

;n*er t!e euit& met!"*. t!e invest"r re'"rts a increases (*ecreases) in t!e netassets " t!e investee c"m'an& as an increase (*ecrease) in t!e carr&in# am"unt" t!e investment acc"unt "n its baance s!eet+ In a**iti"n. t!e invest"rrec"#ni8es its s!are " t!e inc"me ("ss) earne* b& t!e investee c"m'an&!ere"re. t!e invest"rs inancia statements reect t!e 'er"rmance " invest"rc"m'an& mana#ement. incu*in# its 'er"rmance as it inuences t!e investeec"m'an& "'erati"ns+ !is is reevant in"rmati"n "r t!e inancia ana&stbecause t!e inancia statements '"rtra& t!e ec"n"mic substance "mana#ements resuts "r t!e 'eri"* (as ,e as t!e invest"rs e#a entitementt" its s!are " t!e c!an#in# net assets " t!e investee) an* t!is 'r"vi*es a basis"r 're*ictin# uture 'er"rmance an* cas! ",s+

;n*er t!e F$-%I met!"*. t!e s!ares in t!e investee are a*Huste* t" t!eir currentmaret vaue. but t!e invest"r !as ma*e a *ecisi"n t" !"* t!e s!ares+ !e& aren"t "r tra*in#+T In a**iti"n. t!e invest"rs s!are " t!e *ivi*en*s 'ai* b& t!einvestee increase t!e invest"rs inc"me even t!"u#! t!e investee ma& !ave

incurre* "sses+ Aternative&. t!e investee c"u* be 'r"itabe. but n"t 'a& an&*ivi*en*s t" t!e invest"r. s" ,!at is re'"rte* "n t!e invest"rs inc"me statement*"es n"t c"rres'"n* t" t!e inuence t!e invest"r !as !a* "n investee c"m'an&"'erati"ns+ !e F$-%I met!"*. !",ever. *"es rec"#ni8e in t!e inc"me statementan* t!e baance s!eet t!r"u#! t!e F$ a*Hustment. t!e marets assessment "!", t!e investees current "'erati"ns aect its vaue t" t!e invest"r+EXERCISE 9-1 (C"ntinue*)

!e c"st met!"* is t!e east in"rmative. as it !as t!e *",nsi*es " t!e F$-%Imet!"* ,it!"ut t!e beneit " t!e F$ a*Hustment eac! &ear+


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(a) 110.000. t!e increase t" t!e Investment acc"unt+

(b) I t!e 'a&"ut rati" is 356. t!en 356 " t!eir '"rti"n " t!e net inc"me ist!eir s!are " *ivi*en*sJ 110.000 X 356 3.500. t!e cre*it t" t!einvestment acc"unt+

(c) Annua *e'reciati"n " e7cess 'a&ment "r ca'ita assets 1.000. t!eremainin# cre*it t" t!e investment acc"unt+

(*) F"7s s!are is 256. s". "ta %et Inc"me 7 256 110.000+"ta %et Inc"me " :"ven 110.000 K 256 0.000+

(e) 3.500 K 256 15.000 "r "ta %et Inc"me " 0.000 7 356 15.000

() C"st " 256 " investment in :"ven C"r'+ 1.000.000256 " carr&in# am"unt " :"ven C"r'+

256 X 3.200.000 (00.000 )Pa&ment in e7cess " s!are " carr&in# am"unt 200.000Fair vaue a"cate* t" *e'reciabe assets

1.000 X 10 (10.000 );ne7'aine* e7cess assi#ne* t" #""*,i


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(a) @ecember 31. 2013

F$-CI Investments+++++++++++++++++++++++++++++++++++ 1.250.000Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++ 1.250.000

?une 15. 201

Cas! (0+=5 X


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(b) @ecember 31. 2013

Investment in Ass"ciate++++++++++++++++++++++++ 1.250.000Cas!++++++++++++++++++++++++++++++++++++++++++++++++ 1.250.000

?une 15. 201

Cas! (


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(*) Statement " C"m're!ensiveInc"meJ

Fair $aue

et!"*

Euit&

et!"*@ivi*en* revenue 93.=50Investment inc"me 130.000Incu*e* in net inc"me 93.=50 130.000

t!er c"m're!ensive inc"meJ;nreai8e* #ain "n F$-CI

investment *urin# t!e &ear


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(a) 201JF$-%I Investments++++++++++++++++++++++++++++++++++++++++++++19


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(b) 201JInvestment in Ass"ciate++++++++++++++++++++++++++++++++++19


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2015JInvestment Inc"me "r M"ss++++++++++++++++++++++++++++ 2.000

Investment in Ass"ciate++++++++++++++++++++++++++ 2.000

(0.000 X +30)

Investment Inc"me "r M"ss++++++++++++++++++++++++++++ 2.000Investment in Ass"ciate++++++++++++++++++++++++++ 2.000

Carr&in# am"unt " t!e investment in art8 Mimite*JC"st 19


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Statement " C"m're!ensive Inc"me. 2015

%et inc"me (incu*es investment "ss "n t!e ass"ciate " 2


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1+ (a) 12.250. *ivi*en* inc"me+(b) %"ne re'"rte*Dre*ucti"n " investment acc"unt (euit& met!"*)+(c) %"ne re'"rte*Dt!e *ivi*en* is eiminate* as aninterc"m'an& transacti"n "n c"ns"i*ati"n+

"ta *ivi*en* inc"me re'"rte* is t!ere"re 12.250+

2+ Sae 'rice (9 X


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>ecause t!e R"**& Mt*+ s!ares ,ere t!e "n& investment acc"unte* "r atF$-CI. n" baance remains in ACI+


(a) Investment in Ass"ciate +++++++++++++++++++++++++++++++++ 3.000Cas!++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 3.000

(b) C"st " investment 3.000Carr&in# am"unt

Assets 1.310.000Miabiities 110.000

1.200.000X 306 3


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(b) C"ntinue*

Am"rti8ati"n " un*ervaue* *e'reciabe assetsJ(3


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(a) Si#niicant Inuence Investment+++++++++++++++ 10.000Cas!++++++++++++++++++++++++++++++++++++++++++++++++++++++ 10.000

(b) C"st " 06 investment 10.000as!i C"r'+ carr&in# am"untsJ

Assets 25.000Miabiities 115.000

=10.000X 06 2.000

E7cess 'ai* "ver s!are " b"" vaue 12


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M"ss "n @isc"ntinue* 'erati"ns++++++++++++++ 15.200Si#niicant Inuence Investment ++++++++++++++


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SM;I%S PR>MES

PR>ME 9-1

(a)ct"ber . 201

Cas! 212.50



(5.000 s!ares X +30 X 996 212.50)

%"vember 1


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PR>ME 9-1 (C"ntinue*)

(a) (C"ntinue*)

!e entr& "n @ecember 31. 201 is t!ere"re as "",sJ

Investment Inc"me "r M"ss 21.500F$-%I Investments 21.500

Current AssetsJ

ra*in# Euit& Investments. F$-%I 31.000

ra*in# investments are #enera& current assets+

(c)" be cassiie* as a current asset un*er IFRS. a F$-%I investment "n& !as t"meet "ne " t!e "",in# t!ree criteriaJ 1+ It is e7'ecte* t" be reai8e* ,it!in 12m"nt!s r"m t!e re'"rtin# *ate/ 2+ It is !e* 'rimari& "r tra*in# 'ur'"ses/ "r 3+It is a cas! euivaent+ As "n# as an& "ne is met. t!e investment is incu*e* incurrent assets+

E7am'es " situati"ns ,!ere F$-%I investments ,"u* be e7cu*e* r"m currentassetsJ

!e entit& *"es n"t cassi& its assets an* iabiities acc"r*in# t" current

an* n"n-current cate#"ries+ !e investments are !e* in a '"rt"i" " investments (suc! as a sinin#

un*) !e* "r "n# term 'ur'"ses. suc! as t" retire a b"n* issue ,!en itmatures. "r t" be !e* s'eciica& "r a 'ant e7'ansi"n 'anne* "r t!euture+

!e investment *"es n"t meet an& "ne " t!e reuire* criteria "rcassiicati"n as current. suc! as an euit& investment t!at is acuire* "rt!e "n#er term+ ana#ement ma& ,ant t" use t!e acc"untin# met!"*,!ereb& c!an#es in its air vaue are rec"#ni8e* an* ", t!r"u#! net

inc"me+•

PR>ME 9-2

(a)iiams C"r'+ b"n*s

Februar& 1. 201F$-%I Investments (500.000 X 10


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Cas! 552.500

(500.000 X 126 X B12)

A'ri 1. 201

Cas! 30.000Interest Receivabe 20.000

Investment Inc"me "r M"ss 10.000(500.000 X 126 X


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@ecember 1. 201Cas! 9.000

Interest Receivabe 1.500Investment Inc"me "r M"ss =.500

(200.000 X 96 X ME 9-2 (C"ntinue*)

(c)Sc"tia C"r'+ s!ares

Au#ust 12. 2012F$-%I Investments 1==.000

Investment Inc"me "r M"ss 1.==0

Cas! 1=.==0(3.000 s!ares X 59 1==.000)

Se'tember 2. 201Cas! 1.500


(3.000 X +50)


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@ecember 2. 201Cas! 1.5


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(*)

At @ecember 31. 2013. t!e tra*in# investment (F$-%I) ,"u* !ave been a*Huste*t" its air vaue " 390.000+ !e sae in 201 "r 00.000 ,"u* tri##er anInvestment Inc"me " 10.000 (00.000 G 390.000) as an increase in t!e air

vaue " t!e investment since t!e @ecember 31. 2013 &ear en*+

(e)

?u& 1. 201F$-%I Investments 202.000

Interest Receivabe 1.500Cas! 203.500

@ecember 1. 201

Cas! 9.000Interest Receivabe 1.500

Interest Inc"me =.15F$-%I Investments 3<

See am"rti8ati"n sc!e*ue be",+At!"u#! < m"nt!s interest is receive* incas!. n"te t!at interest inc"me an* t!e

'remium am"rti8ati"n are *etermine*usin# t!e eective interest met!"* sincet!e *ate " acuisiti"n "n&+

@ecember 31. 201Interest Receivabe (9.000 X 1B


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@ecember 31. 201;nreai8e* :ain "r M"ss =.52

F$-%I Investments =.52

Carr&in# am"unt 201."n* PremiumAm"rti8ati"nDEective Interest et!"*

96 >"n* ie*in# +56

@ateCas!


>"n*

PremiumAm"rti8ati"n

Carr&in#

Am"unt " >"n*s

0=B01B112B01B10


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PR>ME 9-3

(a) @ecember 31. 2013>"n* Investment at Am"rti8e* C"st+++++++++++ 10."n* Investment at Am"rti8e* C"st++++ 1.=2

Interest Inc"me++++++++++++++++++++++++++++++++++++++ 5.2=2

(*) @ecember 31. 2013F$-%I Investments+++++++++++++++++++++++++++++++++++++++++ 10.


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() Cas!+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ =.000

Investment Inc"me "r M"ss++++++++++++++++++ =.000

Investment Inc"me "r M"ss+++++++++++++++++++++++++ 1.50 F$-%I Investments LLLLLLLLL 1.50

(10=.500 G 105.ME 9-

(a) Investments (F$-CI)D@ecember 31. 201

Securities C"stFair

$aue

An*ers"n C"r'+unter Mt*+

.=50 50.000

9.50 5


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Vin# C"r'+"ta " '"rt"i"

255.0003.=50

25.00=3.0

%"teJ >aance in ACI. @ecember 31. 201 10.2=0 *ebit (=3.0 G3.=50) since a securities ,ere 'urc!ase* in 201+ !e An*ers"n s!aresmae u' 9.50 - .=50 30 cre*it " t!is+

Sae " An*ers"n s!ares. ?anuar& 15. 2015J:r"ss sein# 'rice " 2.500 s!ares at 21 52.500Mess ees (2.150)%et 'r"cee*s r"m sae 50.350C"st " 2.500 s!ares (.=50)"ta #ain "n sae " s!ares 1.


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(Pr"" " recassiicati"n am"untJ 30 ==0 1.ME 9-(C"ntinue*)

(b) !e t"ta 'urc!ase 'rice isJ(1.000 X 33+50) 1.90 35.0+

!e 'urc!ase entr& ,i beJ

A'ri 1=. 2015F$-CI Investments+++++++++++++++++++++++++++++++++++++++ 35.0

Cas!++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 35.0

(c) Investments (F$-CI)D@ecember 31. 2015

Securities C"st

Carr&in#

Am"unt

Fair

$aue

:ain

(M"ss)unter Mt*+ (10.000 s!s)Vin# C"r'+ (


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PR>ME 9- (C"ntinue*)

(*) Re'"rtin# " F$-CI Investments

Statement " Financia P"siti"n. @ecember 31. 2015

M"n#-term Investments (assume*)

Investments. at air vaue ,it! #ains an* "sses in CI =9.000

S!are!"*ers Euit&Accumuate* "t!er c"m're!ensive inc"me (cre*it) .520

Statement " C"m're!ensive Inc"me. ear En*e* @ec+ 31. 2015

%et inc"me (incu*in# an& *ivi*en* inc"me "n s!ares) 7

t!er c"m're!ensive inc"me- items t!at ,i n"t be recassiie* t" net inc"meJN"*in# #ains "n F$-CI investments *urin# &ear (==0 19.


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PR>ME 9-5

(a) 2011+ ar+ 1 Cas!++++++++++++++++++++++++++++++++++++++++++++++++++ 1.00

@ivi*en* Revenue+++++++++++++++++++ 1.00(900 X 2)

2+ A'r+ 30 F$-CI Investments++++++++++++++++++++++++++ 0;nreai8e* :ain "r M"ss - CI 0Q300 X (10 G =+20)

Cas!++++++++++++++++++++++++++++++++++++++++++++++++++ 3.000F$-CI Investments++++++++++++++++ 3.000 300Q300 X 10

;nreai8e* :ain "r M"ss - CI+++++++++ 300

:ain "n sae " Investments ++ 300 300Q300 X (10 G 9)

3+ a& 15 F$-CI Investments++++++++++++++++++++++++++ 3.200Cas! +++++++++++++++++++++++++++++++++++++++++ 3.200(200 X 1


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+ @ec+ 31 F$-CI Investments++++++++++++++++++++++ .110;nreai8e* :ain "r M"ss G CI .110

Securit& Wuantit&Carr&in#Am"unt Fair $aue

:ain(M"ss)

Ear C"r'+ 1 1.200 1.=00 20.00 5.=00?"sie C"r'+ 2 900 1.50 1=.100 2.250As!er C"r'+ 3 200 1.0 1.


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(b)Re'"rtin# " F$-CI Investments

Statement " Financia P"siti"n. @ecember 31

201 2015M"n#-term Investments (assume*)

Investments. at air vaue ,it! #ains an*"sses in CI 39.100 1.=00

S!are!"*ers Euit&Accumuate* "t!er c"m're!ensive inc"me 1.100 5.500

Statement " C"m're!ensive Inc"me

%et inc"me (incu*es *ivi*en*s an* reai8e* #ainsB"sses) 7 7

t!er c"m're!ensive inc"me G items t!at ma& berecassiie* subseuent& t" net inc"meJ

N"*in# #ains "n F$-CI investments *urin# &ear .950 .000Recassiicati"n a*Hustment "r #ains transerre* t" net inc"me (300 ) 00t!er c"m're!ensive inc"me .


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(c)I Caste#ar Mt*+ a''ie* t!e c"st met!"* in acc"untin# "r t!ese investmentsinstea* " t!e F$-CI met!"*. t!e net inc"me numbers ,"u* n"t c!an#e+

!& is t!is

1+@ivi*en*s are rec"#ni8e* in inc"me un*er b"t! a''r"ac!es. an*

2+;n*er t!e c"st met!"*. t!e u am"unt " an& reai8e* #ains "r "sses arerec"#ni8e* in net inc"me ,!en t!e investments are s"*+ ;n*er t!e F$-CIa''r"ac!. t!e u am"unt " t!e reai8e* #ains "r "sses are transerre* t"net inc"me ,!en t!e investments are s"*+

!ere"re. t!e net inc"me re'"rte* is t!e same un*er b"t! met!"*s+(*)

An invest"r is intereste* in assessin# t!e 'r"s'ects "r uture cas! ",s+ ;n*ert!e F$-CI a''r"ac!. t!e investments are re'"rte* at t!eir air vaue ,!ic! ismuc! m"re reevant in"rmati"n t!an t!e am"unt 'ai* "r t!e investments ,!ent!e& ,ere acuire*. as un*er t!e c"st met!"*+

In a**iti"n. t!e unreai8e* #ains an* "sses re'"rte* in CI te t!e invest"r !",

,e t!e enter'rise mana#e* its '"rt"i" " investments *urin# t!e 'eri"*/

,!et!er mana#ement increase* t!e '"tentia "r uture cas! ",s "r re*uce*

t!at '"tentia+ !e F$-CI a''r"ac! re'"rts in CI t!e unreai8e* #ains an*

"sses "n t!e investments as t!e& "ccur rat!er t!an ,aitin# unti t!e& are s"*

an* re'"rtin# t!e t"ta an* ina c!an#e in vaue "n& at t!at '"int+


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acc515 chapt#9 sol. & extras

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