自主學(xué)習(xí)階段講義19配套a6financial instrument

Financialfinancial is‘a(chǎn)nycontractthatgivesrisefinancialafinancialassetofoneentityandafinancialliabilityorequityinstrumentofanotherentity’(IAS32,para11)AfinancialassetisanyassetthatanequityinstrumentofanotheracontractualrighttoreceivecashoranotherfinancialassetfromanotherentityacontractualrighttoexchangefinancialinstrumentswithanotherentityunderconditionsthatarepotentiallyfavorabletotheentityAfinancialliabilityisanyliabilitythatiscontractualobligationtodelivercashoranotherfinancialassettoanotherentitycontractualobligationtoexchangefinancialinstrumentswithanotherentityunderconditionsthatarepotentiallyanon-derivativecontractforwhichtheentityisormaybeobligedtodeliveravariablenumberoftheentity'sownequityinstruments.(IAS32,para11)Anequityinstrumentis‘a(chǎn)nycontractthatevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities'(IAS33,para11)IAS32FinancialInstruments:PresentationdealswiththeclassificationoffinancialinstrumentsandtheirfinancialstatementpresentationIFRS7FinancialInstruments:DiscoursesdealswiththedisclosureoffinancialinstrumentsinfinancialstatementsIFRS9FinancialInstrumentsisconcernedwiththeinitialandsubsequentmeasurementoffinancialinstrumentsIAS32clarifiesthataninstrumentisonlyanequityinstrumentifinthedefinitionofafinancialliabilityarenotIAS32doesnotclassifyafinancialinstrumentasequityorfinancialliabilityonthebasisofitslegalformbutonthesubstanceofthetransaction.4millionpreferencesharesfor$2.50each.Theyarenotmandatorilyredeemable.Adividendispayableif,andonlyif,dividendsarepaidonordinaryshares.Afinancialliabilityexistsifthereisanobligationtodelivercashoranotherfinancialasset.ThereisnoobligationforXtorepaytheinstrument.Dividendsareonlypayableiftheyarealsopaidonordinaryshares.Thereisnoobligationtopaydividendsonordinarysharessothereisnoobligationtopaydividendsonthesepreferenceshares.Theinstrumentisnotafinancialliability.Theproceedsfromthepreferenceshareissueshouldthereforebeclassifiedasequityinthestatementoffinancialposition.Xissued1millionpreferencesharesfor$3each.Nodividendsarepayable.Xwillredeemthepreferencesharesinthreeyears’timebyissuingordinarysharesworth$3million.TheexactnumberofordinarysharesissuablewillbebasedontheirfairvalueontheXwillredeemthepreferencesharewithavariablenumberofordinarysharesworth$3million.Therefore,thepreferenceshareshouldbeclassifiedasliabilityinthestatementfinancialposition.2millionpreferencesharesfor$2.80each.Nodividendsarepayable.Thepreferenceshareswillberedeemedintwoyears’timebyissuing3millionordinarysharesXwillredeemthepreferencesharewithafixednumberofordinaryshares.Therefore,thepreferenceshareshouldbeclassifiedasequityinthestatementfinancialposition.DividendspaidinrespectofpreferencesharesclassifiedasaliabilitywillbechargedasafinanceexpensethroughprofitorlossDividendspaidonsharesclassifiedasequitywillbereportedinthestatementofchangesinequityIAS32statesthatafinancialassetandafinancialliabilityveryonlybeoffset circumstances.Thenetverymayonlybereportedwhenthehasalegally ablerighttosetofftheintendseithertosettleonanetbasis,ortorealisetheassetandsettletheliabilitysimultaneously"(IAS32,para42)InitialrecognitionoffinancialAtinitialrecognition,financialliabilitiesaremeasuredatfairIfthefinancialliabilitywillbeheldatfairvaluethroughtransactioncostsshouldbetransactioncostsshouldbe

tothestatementIfthefinancialliabilitywillnotbeheldatfairvaluethroughprofitorloss,transactioncostsshouldbedeductedfromitscarryingamountSubsequentmeasurementoffinancialThesubsequenttreatmentofafinancialliabilityisthattheycanbemeasuredateither:amortisedfairvaluethroughprofitorTheinitialcarryingamountofafinancialliabilitymeasuredatamortisedcostisitsfairvaluelessanytransactioncosts(the‘netproceeds’fromissue).Afinancecostischargedontheliabilityusingtheeffectiverateofinterest.ThiswillincreasethecarryingamountoftheliabilityDrFinancecost(P/L)CrLiabilityTheliabilityisreducedbyanycashpaymentsmadeduringtheyearDrLiabilityCrOn1January20X1Xissuedaloannotewitha$50,000nominalvalue.Itwasissuedatadiscountof16%ofnominalvalue.Thecostsofissuewere$2,000.Interestof5%ofthenominalvalueispayableannuallyinarrears.Thebondmustberedeemedon1January20X6(after5years)atapremiumof$4,611.Theeffectiverateofinterestis12%perHowwillthisbereportedinthefinancialstatementsofXovertheperiodtoredemption?TheliabilitywillbeinitiallyrecognisedatthenetproceedsfaceLess:16%Less:IssueInitialrecognitionofTheliability measuredatamortisedFinancecost(LiabilityxCashClosing12345TO:Profitor To:Statementof

To:OutofthemoneyderivativesandliabilitiesheldforaremeasuredatfairvaluethroughprofitorOn1January20X1,Xissuedafinancialliabilityforitsnominalvalueof$10million.Interestispayableatarateof5%inarrears.Theliabilityisrepayableon31December20X3.Xtradesfinancialliabilitiesintheshort-term.At31December20X1,marketratesofinteresthaverisento10%Discusstheaccountingtreatmentoftheliabilityat31December20X1Thefinancialliabilityistradedintheshort-termandsoismeasuredatfairvaluethroughprofitorloss.TheliabilitymustberemeasuredtofairvalueatthereportingdateAssumingthatthefairvalueoftheliabilitycannotbeobservedfromanactivemarket,itcanbecalculatedbydiscountingthefuturecashflowsatamarketrateofinterestCashCashDiscount Theinterestpaymentsare$10mx5%=$0.Thefairvalueoftheliabilityattheyear-endis$9.13millionThefollowingadjustmentisrequiredDrLiability($10m-$9.13m)CrProfitorloss

$$PilotpaperQ1IssueofconvertiblePilotpaperQ1IssueofconvertibleBondholderscaninsteadoptforconversionintheformofafixednumberofshares.Interestonthebondispayableatarateof4%ayearinarrears.Theinterestpaidintheyearhasbeenpresentedinfinancecosts.Theinterestrateonsimilardebtwithoutaconversionoptionis10%.DiscountDiscountrateDiscountrate12RequirementDiscuss,withsuitablecalculations,howtheconvertiblebondshouldbedealtwithintheconsolidatedfinancialstatementsfortheyearended30September20X6,showinganyadjustmentsrequired.(6marks)Hillhasissuedacompoundinstrumentbecausethebondhascharacteristicsofbothafinancialliability(anobligationtorepaycash)andequity(anobligationtoissueafixednumberofHill’sownIAS32FinancialInstruments:Presentationspecifiesthatcompoundinstrumentsmustbesplitinto:aliabilitycomponent(theobligationtorepayanequitycomponent(theobligationtoissueafixednumberofThesplitoftheliabilitycomponentandtheequitycomponentattheissuedateiscalculatedasfollows:theliabilitycomponentisthepresentvalueofthecashrepayments,discountedusingthemarketrateonnon-convertiblebonds;theequitycomponentisthedifferencebetweenthecashreceivedandtheliabilitycomponentattheissuedate.Theinitialcarryingamountoftheliabilityshouldhavebeenmeasuredat$17·9million,calculatedasfollows: Cash

PresentDiscountDiscount30September 30September 17·18Theequitycomponentshouldhavebeeninitiallymeasuredat$2·1million($20m–$17·9m).TheadjustmentrequiredDrNon-currentliabilitiesCrEquity

Theequitycomponentremainsunchanged.Afterinitialrecognition,theliabilityismeasuredatamortisedcost,asfollows:1OctoberFinancechargeCash30SeptemberThefinancecostrecordedfortheyearwas$0·8millionandsomustbeincreasedby$1·0million($1·8m–$0·8m).DrFinanceCrNon-current

Theliabilityhasacarryingamountof$18·9millionasatthereporting2019/122019/12PreferenceOn1October20X8,theCEOandfinancedirectoreachpaid$2mcashinexchangeforpreferencesharesfromStentCowhichprovidecumulativedividendsof7%perannum.Thesepreferencesharescaneitherbeconvertedintoafixednumberofordinarysharesintwoyears’time,orredeemedatparonthesamedate,atthechoiceoftheholder.(4Thefinancedirectorsuggeststotheaccountantthatthepreferencesharesshouldbeclassifiedasequitybecausetheconversionisintoafixednumberofordinarysharesonafixeddate(‘fixedforfixed’)andconversioniscertain(giventhecurrentmarketvalue(4ConvertibleredeemablepreferenceIAS32definesanequityinstrumentasanycontractwhichevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.Anequityinstrumenthasnocontractualobligationtodelivercashoranotherfinancialasset,ortoexchangefinancialassetsorfinancialliabilitiesunderpotentiallyunfavourableconditions.Ifsettledbytheissuer’sownequityinstruments,anequityinstrumenthasnocontractualobligationtodeliveravariablenumber,orissettledonlybyexchangingafixedamountofcashoranotherfinancialassetforafixednumberofitsownequityPreferenceshareswhicharerequiredtobeconvertedintoafixednumberofordinarysharesonafixeddateshouldbeclassifiedasequity(thisisknownasthe‘fixedforfixed’requirementtowhichthefinancedirectorHowever,acriticalfeatureindifferentiatingafinancialliabilityfromanequityinstrumentistheexistenceofacontractualobligationoftheissuereithertodelivercashoranotherfinancialassettotheholder,ortoexchangefinancialassetsorfinancialliabilitieswiththeholder,underconditionswhicharepotentiallyunfavourabletotheissuer.Inthiscase,StentCohasissuedconvertibleredeemablepreferenceshares–whichmakeslittlecommercialsensefromthe ,astheyoffertheholderthebenefitofconversionintoordinarysharesifsharepricesrise,andthesecurityofredemption(atthechoiceoftheholder)ifsharepricesfall.IAS32notesthatthesubstanceofafinancialinstrument,ratherthanitslegalform, ernsitsclassificationintheentity’sstatementoffinancialposition.Apreferencesharewhichprovidesformandatoryredemptionforafixedordeterminableamountatafixedordeterminablefuturedateorgivestheholdertherighttorequiretheissuertoredeemtheinstrumentataparticulardateforafixedordeterminableamountisafinancialliability.Becausethepreferencesharesoffertheholderthechoiceofconversionintoordinarysharesaswellasredemptionintwoyears’time,thetermsofthefinancialinstrumentshouldbeevaluatedtodeterminewhetheritcontainsbothaliabilityandanequitySuchcomponentsareclassifiedsepara yascompoundfinancialinstruments,recognisingsepara ythecomponentsofafinancialinstrumentwhichcreatesbothafinancialliabilityoftheentity(acontractualarrangementtodelivercashoranotherfinancialasset)andanequityinstrument(acalloptiongrantingtheholdertheright,foraspecifiedperiodoftime,toconvertitintoafixednumberofordinarysharesoftheentity).InaccordancewithIFRS9FinancialInstruments,whentheinitialcarryingamountofacompoundfinancialinstrumentisallocatedtoitsequityandliabilitycomponents,theequitycomponentisassignedtheresidualamountafterdeductingfromthefairvalueoftheinstrumentasawholetheamountsepara ydeterminedfortheliabilitycomponent.StentCowouldmeasurethefairvalueoftheconsiderationinrespectoftheliabilitycomponentbasedonthefairvalueofasimilarliabilitywithoutanyassociatedequityconversionoption.Theequitycomponentisassignedtheresidualamount.Gearingwoulddecreaseifthedraftfinancialstatementshadincludedthepreferenceshareswithinequity:thecorrectionwouldincreasenon-currentdebt(thepresentvalueofthefutureobligations)anddecreaseequity.【MJ：整個題目，重要】44Derivative.Aderivativehasthreeitsvaluechangesinresponsetoanunderlying(e.g.sharepriceorinterestitrequireslittleornoinitialnetitissettledatafutureEg：Forwardcontract,future,Ex-Ex-ForwardOn1November20X1Johnsontookoutaspeculativecoffeecontractto fordeliveryon30April20X2coffeeanagreedpriceof$6,000intendingtosettlenetincash.Duetoasurgeinexpectedsupply,aforwardcontractfordeliveryon30April20X2wouldhavecost$5,000on31December20X1.Discuss,withsuitablecalculations,howtheabovefinancialinstrumentsshouldbeaccountedforinthefinancialstatementsofJohnsonfortheyearended31December20X1. financialIFRS9appliestothosecontractstobuyorsellanon-financiaitemthatcanbesettlednetincashfinancial ThefairvalueofaforwardcontractatinceptionisThefairvalueofthecontractattheyearend$Marketpriceofforwardcontract-yearendfordeliveryon30Johnson'sforwardAfinancialliabilityof$1,000isthereforerecognisedwithacorrespondingchargeof$1,000toprofitorloss.InitialInitialrecognitionoffinancialIFRS9saysthatanentityshouldrecogniseafinancialasset'when,andonlywhen,theentityespartytothecontractualprovisionsoftheinstrument'(IFRS9,para3.1.1)IFRS9appliestothosecontractstobuyorsellanon-financiaitemthatcanbesettlednetincashoranotherfinancialinstrument,orbyexchangingfinancialinstrumentsasifthecontractswefinancialinstruments(IFRS9:para.2.4).TheseareconsideredfinancialcontractsHowever,contractsthatwereenteredinto(andcontinuetobeheld)fortheentity'sexpectePurchase,saleorusagerequirementsofnon-financialitemsareoutsidethescopeofIFRS9.Theseareexecutorycontracts.Executorycontractsarecontractsunderwhichneitherpartyhasperformedanyofitsobligationsorbothpartieshavepartiallyperformedtheirobligationstoanequalextent)(IAS37:para.3).Executorycontractsarenotinitiallyrecognisedinthefinancialstatementsunlesstheyareonerous,inwhichcaseaprovisionisGustosoisapubliclimited whichproducesarangeofluxuryItalianfoodproductswhicharesoldtorestaurants,shopsandsupermarkets.WheatGustosopurchasessignificanttiesofwheatforuseinitsbreadandpastaproducts.Thesearehigh-valueproductsonwhichGustosorecordssignificantprofitmargins.Nonetheless,thepriceofwheatisvolatileandso,on1November20X7,Gustosoenteredintoacontractwithartopurchase500,000bushelsofwheatinJune20X8for$5abushel.Thecontractcanbesettlednetincash.Gustosohasenteredintosimilarcontractsinthepastandhasalwaystakendeliveryofthewheat.By31December20X7thepriceofwheathadfallen.Thefinancedirectorrecordedaderivativeliabilityof$0·5milliononthestatementoffinancialpositionandalossof$0·5millioninthestatementofprofitorloss.WheatpricesmayriseagainbeforeJune20X8.Theaccountantisunsureifthecurrentaccountingtreatmentiscorrectbutfeelsfortableapproachingthefinancedirectoragain.IFRS9FinancialInstrumentsappliestocontractstobuyorsellanon-financialitemwhicharesettlednetincash.Suchcontractsareusuallyaccountedforasderivatives.However,contractswhichareforanentity’s‘ownuse’ofanon-financialassetareexemptfromtherequirementsofIFRS9.Thecontractwillqualifyas‘ownuse’becauseGustosoalwaystakesdeliveryofthewheat.ThismeansthatitfallsoutsideIFRS9andsotherecognitionofaderivativeisincorrect.Thecontractisanexecutorycontract.Executorycontractsarenotinitiallyrecognisedinthefinancialstatementsunlesstheyareonerous,inwhichcaseaprovisionisrequired.Thisparticularcontractisunlikelytobeonerousbecausewheatpricesmayriseagain.Moreover,thefinishedgoodswhichthewheatformsapartofwillbesoldataprofit.Assuch,noprovisionisrequired.ThecontractwillthereforeremainunrecogniseduntilGustosotakesdeliveryofthewheat.Thederivativeliabilityshouldbederecognised,meaningthatprofitswillincreaseby$0·5million.PilotpaperSubsequentacquisitionof20%PilotpaperSubsequentacquisitionof20%ofThecontingentpaymentsweretobebasedonthefutureprofitsofMachuptoaumamount.Kutchenfeltthatthefixedinitialpaymentwasanequitytransaction.Additionally,Kutchenwasunsureastowhetherthecontingentpaymentswereeitherequity,financialliabilitiesorcontingentliabilities.Afteraboarddiscussionwhichcontaineddisagreementastotheaccountingtreatment,KutchenispreparingtodisclosethecontingentpaymentsinaccordancewithIAS?37Provisions,ContingentLiabilitiesandContingentAssets.Thedisclosurewillincludetheestimatedtimingofthepaymentsandthedirectors’estimateoftheamountstobesettled.Requirement:AdviseKutchenonthedifferencebetweenequityandliabilities,andontheproposedaccountingtreatmentofthecontingentpaymentsonthesubsequentacquisitionof20%ofMach.(8marks)TheFrameworkdefinesaliabilityasapresentobligation,arisingfrompasteventsandthereisanexpectedoutflowofeconomicbenefits.IAS32FinancialInstruments:PresentationestablishesprinciplesforpresentingfinancialinstrumentsasliabilitiesorIAS32doesnotclassifyafinancialinstrumentasequityorfinancialliabilityonthebasisofitslegalformbutonthesubstanceoftheThekeyfeatureofafinancialliabilityisthattheissuerisobligedtodelivereithercashoranotherfinancialassettotheholder.Anobligationmayarisefromarequirementtorepayprincipalorinterestordividends.Incontrast,equityhasaresidualinterestintheentity’sassetsafterdeductingallofitsliabilities.Anequityinstrumentincludesnoobligationtodelivercashoranotherfinancialassettoanotherentity.AcontractwhichwillbesettledbytheentityreceivingordeliveringafixednumberofitsownequityinstrumentsinexchangeforafixedamountofcashoranotherfinancialassetisanequityHowever,ifthereisanyvariabilityintheamountofcashorownequityinstrumentswhichwillbedeliveredorreceived,thensuchacontractisafinancialassetorliabilityasapplicable.Thecontingentpaymentsshouldnotbetreatedascontingentliabilitiesbuttheyshouldberecognisedasfinancialliabilitiesandmeasuredatfairvalueatinitialrecognition.【MJ：financialcontract】IAS37Provisions,ContingentLiabilitiesandContingentAssetsexcludesfromitsscopecontractswhichareexecutoryinnature,andthereforepreventstherecognitionofaliability.Additionally,thereisnoonerouscontractinthisscenario.Contingentconsiderationforabusinessmustberecognisedatthetimeofacquisition,inaccordancewithIFRS3BusinessCombinations.However,IFRSdonotcontainanyguidancewhenaccountingforcontingentconsiderationfortheacquisitionofaNCIinasubsidiary.ThecontractforcontingentpaymentsdoesmeetthedefinitionofafinancialliabilityunderIAS32.KutchenhasanobligationtopaycashtothevendoroftheNCIunderthetermsofacontract.ItisnotwithinKutchen’scontroltobeabletoavoidthatobligation.TheamountofthecontingentpaymentsdependsontheprofitabilityofMach,whichitselfdependsonanumberoffactorswhichareuncontrollable.【MJ：Q3 IAS32statesthatacontingentobligationtopaycashwhichisoutsidethecontrolofbothpartiestoacontractmeetsthedefinitionofafinancialliabilitywhichshallbeinitiallymeasuredatfairSincethecontingentpaymentsrelatetotheacquisitionofthetheoffsettingentrywouldberecogniseddirectlyin66DerecognitionFinancialassets: –whenthecontractualrightstothecashflowsexpire(e.g.becauseacustomerhaspaidtheirdebtoranoptionhasexpiredworthless);or–thefinancialassetistransferred(e.g.sold),basedonwhethertheentityhastransferredsubstantiallyalltherisksandrewardsofownershipofthefinancialasset.Financialliabilities:–whentheobligationisdischarged(e.g.paidoff),cancelledorexpires.Whereapartofafinancialinstrument(orgroupofsimilarfinancialinstruments)meetsthecriteriaabove,thatpartisderecognised.2018/092018/09TheacquisitionofOn1July20X5,Bananaacquired$10million5%bondsatparwithinterestbeingdueat30Juneeachyear.Thebondsarerepayableatasubstantialpremiumsothattheeffectiverateofinterestwas7%.Bananaintendedtoholdthebondstocollectthecontractualcashflowsarisingfromthebondsandmeasuredthematamortisedcost.On1July20X6,Bananasoldthebondstoathirdpartyfor$8million.Thefairvalueofthebondswas$10.5millionatthatdate.Bananahastherighttorepurchasethebondson1July20X8for$8.8millionanditislikelythatthisoptionwillbeexercised.ThethirdpartyisobligedtoreturnthecouponinteresttoBananaandtopayadditionalcashtoBananashouldbondvaluesrise.Bananawillalsocompensatethethirdpartyforanydevaluationofthebonds.DiscusshowthederecognitionrequirementsofIFRS9FinancialInstrumentsshouldbeappliedtothesaleofthebondincludingcalculationstoshowtheimpactontheconsolidatedfinancialstatementsfortheyearended30June20X7.(7IFRS9FinancialInstrumentsrequiresthatafnancialassetonlyqualifesforderecognitiononcetheentityhastransferredthecontractualrightstoreceivethecashflowsfromtheassetorwheretheentityhasretainedthecontractualrightsbuthasanunavoidableobligationtopassonthecashflowstoathirdparty.Thesubstanceofthedisposalofthebondsneedstobeassessedbyaconsiderationoftherisksandrewardsofownership.Bananahasnottransferredthecontractualrightstoreceivethecashflowsfromthebonds.ThethirdpartyisobligedtoreturnthecouponinteresttoBananaandtopayadditionalamountsshouldthefairvaluesofthebondsincrease.Consequently,Bananastillhastherightsassociatedwiththeinterestandwillalsobeneftfromanyappreciationinthevalueofthebonds.Bananastillretainstherisksofownershipasithastocompensatethethirdpartyshouldthefairvalueofthebondsdepreciateinvalue.Itwouldbeexpectedthat,ifthesalewereagenuinetransferofrisksandrewardsofownership,thenthesalespricewouldbeapproximatetothefairvalueofthebonds.Itwouldonlybeinunusualcircumstancessuchasa dsaleofBanana’sassetsarisingfromseverefnancialdiffcultiesthatthiswouldnotbethecase.Thesalespriceof$8millioniswellbelowthefairvalueofthebondsof$10·5million.Additionally,Bananaislikelytoexercisetheiroptiontorepurchasethebonds.Itcanbeconcludedthatnotransferofrightshastaken ceandthereforetheassetshouldnotbederecognised.Tomeasuretheassetatamortisedcost,theentitymusthaveabusinessmodelwheretheyintendtocollectthecontractualcashflowsoverthelifeoftheasset.Bananamaintainstheserightsandthereforethesaledoesnotcontradicttheirbusinessmodel.ThebondsshouldcontinuetobemeasuredatamortisedcostintheconsolidatedfnancialstatementsofBanana.Thevalueofthebondsat30June20X6wouldhavebeenmillion($10million+7%x$10million–5%x$10million).Amortisedcostprohibitsarestatementtofairvalue.Thevalueofthebondsat30June20X7shouldbe$10·414million($10·2million+7%x$10·2million–5%x$10Theproceedsof$8millionshouldbetreatedasafnancialliabilityandwouldalsobemeasuredatamortisedcost.Aninterestchargeof$0·8millionwouldaccruebetween1July20X6and1July20X8,beingthedifferencebetweenthesaleandrepurchasepriceofthebonds.MeasurementoffinancialInvestmentsinequityinstruments(suchasaninvestmentintheordinarysharesofanotherentity)aremeasuredatfairvaluethroughothercomprehensiveefairvaluethroughprofitorlossFairvaluethroughprofitorThenormalexpectationisthatequityinstrumentswillhavethedesignationoffairvaluethroughprofitorlossFairvaluethroughothercomprehensiveItispossibletodesignateanequityinstrumentasfairvaluethroughothercomprehensivee,providedthatthefollowingconditionsarecompliedwiththeequityinstrumentmustnotbeheldfortrading,andtheremusthavebeenanirrevocablechoiceforthisdesignationuponinitialrecognitionoftheassetFairFairvaluethroughprofitorInvestmentsinequityinstrumentsthatareclassifiedasfairvaluethroughprofitorlossareinitiallyrecognisedatfairvalue.TransactioncostsareexpensedtoprofitorAtthereportingdate,theassetisrevaluedtofairvaluewiththegainorlossrecordedinthestatementofprofitorloss.FairvaluethroughothercomprehensiveInvestmentsinequityinstrumentsthatareclassifiedasfairvaluethroughothercomprehensiveeareinitiallyrecognisedatfairvalueplustransactioncosts.Atthereportingdate,theassetisrevaluedtofairvaluewiththegainorlossrecordedinothercomprehensivee.Thisgainorlosswillnotbereclassifiedtoprofitorlossinfutureperiods.DividendsarerecognisedinprofitorlossunlesstheyclearlyrepresentarecoveryofpartofthecostofanExEx2019/12Q3aDigiwireCohasdevelopedanewbusinessmodelwherebyitsellsmusiclicencestoothercompanieswhichthendeliverdigitalmusictoconsumers.DigiwireCohasagreedtosellClamusicCo,anunlistedtechnologystart-,athree-yearlicencetosellDigiwireCo’scatalogueofclassicalmusictothepublic.20X6,whichisthe20X6,whichisthefirstdayofthelicenceOn1January20X6,ClamusicCowasvaluedatbetween$4.5millionbyaprofessionalvaluerwhousedamarketbasedapproach.At31December20X6,afurthersharevaluationreporthadbeenproducedbythesameprofessionalvaluerwhichindicatedthatClamusicCowasvaluedintheregionof$6.5million.AdvisethedirectorsofDigiwireCoontherecognitionandmeasurementofthe:ClamusicCosharesreceivedasrevenueforthesaleofthethree-yearlicenceandhowtheyshouldbeaccountedforinthefinancialstatementsfortheyearended31December20X6;andInthiscase,themarketapproachhasbeenusedandtherangeoffairvaluesissignificantbasedupontheprofessionalvaluationreport.Therangeoffairvaluesfora7%holdingofshareswould$315,000(7%of