ACCA FR · Chapter 7 · Question 6 of 10
Shrike Co holds an equity investment for which it made the irrevocable FVOCI election under IFRS 9. It sells the investment at a price above its last carrying amount. What happens to the cumulative fair value gains previously recognised in OCI?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) They stay in equity and are not reclassified to profit or loss, though they may be transferred within equity to retained earnings
Explanation
For equity investments designated at FVOCI, IFRS 9 forbids recycling the gains in OCI to profit or loss, even on disposal. The cumulative amount may be transferred within equity, usually to retained earnings. Recycling does apply to debt instruments measured at FVOCI.
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