CERTYNEX IFRS ACADEMY

Alba SA loses control of Delta SA but retains 30%, which gives it significant influence. The fair value of the retained interest is 1,500,000; Alba's share of the net fair value of Delta's identifiable assets and liabilities is 1,300,000 (case data). What is the cost of the equity-accounted interest and how is the difference from the share treated?

The cost is the carrying amount of Delta before the loss of control; the difference from the share of 1,300,000 is taken to profit or loss for the year.

The cost is the fair value of 1,500,000; the difference of 200,000 from the share is goodwill, included in the carrying amount of the investment.

The cost is the share of 1,300,000; the fair value of 1,500,000 is not used, because the investment is not acquired from a third party.

The cost is the fair value of 1,500,000; the difference of 200,000 from the share is income recognised in the share of profit for the period.