Sbr (int/UK) Strategic Business Reporting

(1 mark) 

 

 

(Part (a): 15 marks) 

(b) (i)  Financial 

asset 

According to IFRS 9 Financial instruments, the financial asset should be initially 

recognised at its fair value.  

(1 mark) 

Fair value is defined in IFRS 13 Fair Value Measurement as the price paid when 

selling an asset in an orderly transaction between market participants at the 

measurement date. This amounts to $9 million. 

(1 mark) 

When a financial asset is measured at fair value through other comprehensive 

income, interest income is calculated using the effective rate of interest. This 

amounts to $0.7 million ($9m × 8%). It is credited to profit or loss (as 

investment income) and is added to the carrying amount of the asset.  (1 mark) 

Cash receipts reduce the carrying amount of the financial asset. Prior to 

remeasurement, the financial asset has a carrying amount of $9.3 million ($9m 

+ $0.7m – ($10m × 4%)). 

(1 mark) 

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MO CK A  ANSWER S 

K APLAN P UBLISH IN G