CERTYNEX IFRS ACADEMY

Alba SA contributes to Brise SA, its associate, machines that do not constitute a business, in exchange for a 25% interest in Brise. A colleague recognises the 200,000 gain on that contribution in profit or loss with no elimination at all. What is the error?

The gain is correct, but it should have been presented as part of the share of profit of the associate rather than in Alba's own profit or loss, keeping the amount of 200,000.

The gain should have been recorded directly in Alba's equity, without going through profit or loss, like any transaction with an associate.

The gain follows the treatment of para. 28: it is recognised only to the extent of unrelated investors' interests, and Alba's share is eliminated.

The gain should have been deferred in full as long as Alba holds the interest, whatever the share of Brise's other investors.