Equity investments have to be measured at fair value in the statement of financial position. The default position for equity investments is that the gains and losses arising are recognised in income (Fair Value Through Profit or Loss).
However, there is an election that equity investments can at inception be irrevocably classified and accounted as at Fair Value Through Other Comprehensive Income (FVOCI), so that gains and losses arising are recognised in other comprehensive income, thus creating an equity reserve, while dividend income is still recognised in income. Such an election cannot be made if the equity investment is acquired for trading.
On disposal of an equity investment accounted for as FVTOCI, the gain or loss to be recognised in income is the difference between the sale proceeds and the carrying value. Gains or losses previously recognised in other comprehensive income cannot be recycled to income as part of the gain on disposal.
The 7 Habits of Highly Effective People
The habits Covey describes here seem obvious at first, but you’ll probably notice that you aren’t following all of them. I know I wasn’t. Take Habit 5 – Seek First to Understand, Then to be Understood – how many of us actually do that? Before reading this book, we would always think very selfishly in our conversations. Whenever we’d listen to someone else speak, we’d listen – but we’d also be actively formulating our (usually self-serving) response and looking for the perfect moment to throw it in. Read more
