Cost of current investment acquired was - 1,00,000 but the fair value was - 80,000. The Investment was recorded at 80,000. Now the fair value of…

CA Intermediate · Advanced Accounting · MTP · September 2024
Cost of current investment acquired was - 1,00,000 but the fair value was - 80,000. The Investment was recorded at 80,000. Now the fair value of Investment is 1,20,000. At what value should it be recorded and how much gain will be credited to profit and loss account.
(A) No change is required and it will continue at 80,000
(B) Current investment will be recorded at 1,00,000 and gain of 20,000 will be credited to profit and loss account.
(C) Current investment will be recorded at 1,20,000 and gain of 40,000 will be credited to profit and loss account.
(D) Current investment will be recorded at 1,20,000 but no gain will be credited to profit and loss account.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

Current investment will be recorded at 1,00,000 and gain of 20,000 will be credited to profit and loss account.

Topics: AS 21

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