Q: can equity security investment in financial asset ever be write up after write-down? either the stock investment is classified as for trading or available for sale, in GAAP or in IFRS?
This is related to Schewesser concept checkers for FRA test 5 on page 33. the answer allows write-up. My understanding is that for equity investment, no write-up is allowed to account the carrying value.
Thanks.作者: sdada 时间: 2013-4-16 10:52
the question never mentioned that there was impairment going on. The market value becomes the balance sheet value on the date.
in fact here Impairment would not occur in passive investments - except for HTM securities.作者: RMontgomery 时间: 2013-4-16 10:54
cpk123: thank you for discussion:
1. HTM, to my understanding, is not appropriate here. How can we define maturity for stock? If one really wanted to take passive investment as HTM, then the carrying value would be historical cost at 1200 (the book answer will still be wrong).
2. Is the balance sheet account recorded at fair value the same as what is defined for carrying value? If it were, then there wouldn’t be the case for impairment for hfs, because they would always be equal.
3. even though the question pe se doesn’t ask impairment, it doesn’t automatically mean this is hft. If it is hft, then the book answer would be right. So rather I think the question is ambiguous in this matter.作者: meghanjackson 时间: 2013-4-16 10:56
That question is easier after CFAI questions on that subject. Run thru CFAI fsa questions on that sub and U should get it down cold as ice.
