Fair value changes in profit or loss

Learning objectives

• Recognise the change in fair value in profit or loss, with no revaluation surplus in other comprehensive income.L2, L3
• Calculate, from the case data, the amount relating to fair value changes in profit or loss and justify the basis of calculation.L2, L3
• Record the entry relating to fair value changes in profit or loss and state its effect on the financial statements.L2, L3

Normative references

• IAS 40 §33Fair value model: after initial recognition, all investment property is measured at fair value, except in the cases described in para. 53.
• IAS 40 §35A gain or loss arising from a change in fair value is recognised in profit or loss for the period in which it arises.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

5 questions

• Ravène applies the fair value model. Its investment property was carried at {opening_carrying_amount} at the start of the period; at the reporting date, its fair value is {closing_fair_value}. There were no acquisitions or disposals. Record the closing entry.L3
• Sorel measures its investment property portfolio at fair value. Opening carrying amount: {opening_carrying_amount}. During the period, it acquires a property for {acquisitions} and sells another whose carrying amount was {disposals_at_carrying_amount}. The fair value of the portfolio at the reporting date is {closing_fair_value}. Calculate the fair value gain for the period.L3
• Tarvan applies the fair value model. Its investment properties were carried at {opening_carrying_amount} at the start of the period. It acquired a new one during the period for {acquisition_cost}. The fair value of the whole at the reporting date is {closing_fair_value}. What amount is recognised in profit or loss for the change in fair value?L2
• At the reporting date, the only investment property of Ulmane, measured at fair value, is worth {closing_fair_value} whereas it was carried at {opening_carrying_amount} a year earlier. There was no expenditure or disposal on it. What fair value loss does Ulmane recognise in profit or loss?L3
• Verdane measures its investment property at fair value. One of them, carried at {opening_carrying_amount} at the start of the period, has a fair value of {closing_fair_value} at the reporting date. There were no movements. Record the closing entry.L3