Reclassifying other comprehensive income

Learning objectives

• Record the reclassification to profit or loss of amounts previously recognised in other comprehensive income when control is obtained.L3, L4
• Explain why those amounts are treated as if the interest had been disposed of.L3, L4

Normative references

• IFRS 3 §42In a business combination achieved in stages, the acquirer remeasures its previously held equity interest at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss or in other comprehensive income, as appropriate. Amounts that the acquirer had recognised in other comprehensive income in respect of that interest are recognised on the same basis as would be required if it had disposed directly of the interest: they are reclassified to profit or loss only if a direct disposal would require it.

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

2 questions

• Quartz SA obtains control of Argile SA, in which it held an interest carried at {carrying_amount}. At the acquisition date, the fair value of that interest is {fair_value}. Case convention: a cumulative gain of {oci_balance} is recorded in other comprehensive income in respect of this interest and would be reclassified to profit or loss on a direct disposal; the remeasurement of the interest falls in profit or loss. Calculate the total gain recognised in profit or loss at the acquisition date.L3
• At the date Dolmen SA takes control of Fjord SA, a cumulative gain of {oci_balance} stands in the other comprehensive income reserve in respect of the previously held interest; it would be reclassified to profit or loss on a direct disposal of that interest. Case convention: the entry remeasuring the interest is made separately. Record the reclassification entry.L4