CERTYNEX IFRS ACADEMY

Corvane, a listed company, reports at the end of 20X1 net assets with a carrying amount of 55,000,000 and a market capitalisation of 40,000,000. The analysis of indications written by a staff member includes the following steps. Which one is wrong?

Step 1: at the year-end, Corvane's market capitalisation is compared with the carrying amount of its net assets as shown in the statement of financial position.

Step 2: a difference of 15,000,000 is noted between the two amounts.

Step 3: this difference is disregarded, because the share price relates to the entity as a whole and cannot be an indication for its assets.

Step 4: the other sources of information, both internal and external, are also considered.