Realized vs Unrealized timing

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pub_acco
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Re: Realized vs Unrealized timing

Post by pub_acco »

For FVTOCI equity investments, the calculation of "realized" gains/losses effectively is a kind of IFRS requirement under IFRS 7.11B (c), which requires the disclosure of "the cumulative gain or loss on disposal." I believe "the cumulative gain or loss" here is equivalent to what many people refer to as the "realized" gain or loss.
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Marek Muc
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Re: Realized vs Unrealized timing

Post by Marek Muc »

very good point!
20cent
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Re: Realized vs Unrealized timing

Post by 20cent »

Which is basically my selling price less my initial purchase cost.
All these cumulative gains reported under AOCI are usually transferred to retained earnings upon disposal.

I am convinced by the earlier response that this subject is not addressed by the standard, hence is a company accounting policy that should be applied consistently.
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Marek Muc
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Re: Realized vs Unrealized timing

Post by Marek Muc »

Transfers within equity are never strictly regulated in IFRS and on many occasions IFRS state that they are allowed. For FVOCI assets, I don't think it's even required to accumulate those gains in a separate equity reserve, so you can recognise them in retained earnings (not the same as P/L) even before they are sold.
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