CERTYNEX IFRS ACADEMY

Alba SA has reduced its interest in Brise, an associate, to zero after several years of losses; it has no long-term interest in Brise and no commitment towards it. A colleague nevertheless recognises a further share of losses of 90,000 and presents a negative investment. What is the error?

The loss should have been recognised in other comprehensive income rather than in profit or loss for the year, so as to protect profit.

The loss should have been converted into a provision for risks of 90,000, out of prudence, in Alba's statement of financial position.

The remaining interest should have been reclassified as a financial asset measured under IFRS 9, then the loss recognised on that asset.

As soon as its share of losses equals or exceeds its interest, the investor discontinues recognising its share of further losses.