FINANCIAL ACCOUNTING - INVESTMENT IN EQUITY SECURITIES

A PROJECT OF BARTERS PH
Contributed by: Vince Anthony Feir
Investment in Equity Securities Generally speaking a reasonable significant influence threshold would be the acquisition of
at least 20% of the outstanding shares of a company, but it could be less than 20% for as
long as the holder could influence the operations of the company it is still considered
Equity Securities- Investments held by a company to secure income arising from dividends significant influence take note that one can only recognise an investment in associate
changes in fair value or to hold a strategically important proportion of shares for future account if one has the intention of keeping the interest for more than 12 months
acquisition plans

FVPNL Usual acquisition would be a one time purchase of the required numbers of shares to have
Equity securities held through Fvpnl are either trading or non trading that has a principal SI
purpose of being sold and earning income from short term fv changes gains on fv changes In that case the cost of the Investment in
and dividends are close to pnl because it is really intended to augment operations cost
incurred in acquisition are expensed as incurred Associate account would be the payment made

Pro Forma Entry

FVOCI Inv. In Assoc xxxx

Equity securities which are either held for dividends as income or for strategic purposes Consideration Transfered xxxxx

Changes in FV are closed to OCI due to the fact that these are long term investments either
for future acquisition or for cashflows from dividends and dividends are closed to pnl
because they are income and earned for the current period costs incurred in acquisition are There is Existing Interest FVPNL
capitalised Update the FV of the FVPNL securities and close the difference to pnl plus apply the
preceding procedure

Reclassification Rules Entry

Once elected to fvpnl or fvoci you cannot reclassify it as per IFRS 9 Update

Fin Assets FVPNL. xxxx

Acquisition of Significant Influence Gain in FVPNL Sec xxxx

FINANCIAL ACCOUNTING - INVESTMENT IN EQUITY SECURITIES
A PROJECT OF BARTERS PH
Contributed by: Vince Anthony Feir
Reclassification Cons Transfered. xxxx

Inv in Asoc. xxxx

FVPNL. xxxxx

Con. Trans. xxxxx For accounting for the income in the inv in associate one should use the equity method in
which proportionate share in the operating net income that is adjusted from the under and
over valuation of assets and proportionate share in the oci adjustments are considered as an
Existing interest in FVOCI increase to the investment in assoc account while dividends declared are considered as a
deduction losses would be considered deductions and the entity
Update the FV of Equity through Fvoci and close the Unrealized gain to RE then for the
additional acquisition apply the first procedure

Update

Equity Sec through Fvoci xxxxx

Unrealized gain fvoci. xxxx

Reclassification

Investment in Assoc. xxxx

Unrealized gain FVOCI. xxxx

Equity Sec FVOCI xxxx

RE. xxxx