PRACTICE TOPIC
Investment
Practice Investment with 11 accounting challenges on Accountely — instant IAS/IFRS-compliant scored feedback on every submission.
What investment covers
Investments are accounted for according to the degree of influence they carry and the purpose for which they are held. A small holding with no influence is measured at fair value, significant influence brings in the equity method, and control leads to consolidation. The classification drives everything that follows, so identifying it correctly is the first step.
Challenges here cover initial recognition, subsequent measurement, and the treatment of dividends and fair value movements.
Where marks are usually lost
- Recording dividends received as income under the equity method — they reduce the carrying amount of the investment.
- Leaving fair value movements out of the accounts entirely.
- Applying the equity method to a holding that carries no significant influence.
Further readingIFRS 9: measuring financial instruments
11 Investment practice challenges
TitleTypeDifficulty
Millbrook Corporation - Complete Statement of Financial Position Balance SheetmediumEmberline Retail - Statement of Income and Comprehensive Income (US GAAP) US GAAPIncome StmtmediumAshford Retail plc - Classified Statement of Financial Position with Inventory at Net Realizable Value Balance SheethardAshcombe Capital - A Bond Held at Amortised Cost (IFRS 9) Multi-StatementmediumThornvale Foods - An Associate Under the Equity Method Multi-StatementmediumRosewood Capital - Trading Investments: Purchases, Disposal and Fair Value Adjustment Multi-StatementhardSablecrest Instruments - Trading, Available-for-Sale and Held-to-Maturity Securities (US GAAP) US GAAPJournalmediumCastellane SpA - Statement of Financial Position Balance SheetmediumPellmont Holdings - Equity Shares Elected to FVOCI (IFRS 9) Multi-StatementhardMeridian Holdings PLC - Classified Statement of Financial Position Balance SheetmediumAshbourne plc - Consolidated Statement of Financial Position One Year After Acquisition (IFRS 3, IFRS 10) Multi-Statementhard