Cor pora te rep or ti n g

ACCA P2 I NT & UK : 
COR PORA TE REP OR TI N G
 
22
K A P LAN P UB LI S HI N G
 
Music is under no obligation to buy back the shares and is therefore protected from 
deterioration in the performance or desirability of the shares. 
(1 mark) 
If Music does repurchase the shares, this will be at fair value rather than a pre-fixed 
price and therefore they do not retain the risks and rewards related to price 
fluctuations. 
(1 mark)
The risks and rewards of ownership have been transferred to Noise. This means that 
the asset should be de-recognised and a profit or loss on disposal recorded in the 
statement of profit or loss. 
(1 mark) 
Any gains or losses previously recognised in other comprehensive income are not 
reclassified to profit or loss. However, they may be transferred in equity (from ‘other 
components of equity’ to ‘retained earnings’). 
(1 marks) 
 
You may have concluded that Music should not derecognise the investment. Your 
answer will still score 1 mark per point, as long as your argument is clear and applies 
IFRS 9 to the scenario.