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Former Member

Valuation of security according to IFRS

Hello Every one,

I am doing Valuation of security but i want to do Valuation according to IFRS for that Do i need to change any costimazation ?

Problem is as follows

I have purchased 5 shares with price unit 10 total amount is 50

Journal Enrty Shares 50 $ / Cash Account 50 $ date 9/4/2010

Then I have done Valuation with Unit price 18 Tatal Amount in 90

Journal Enrty Shares 40 $ / valuation profit 40 $ date 12/4/2010

Want to sale the whole shares with unit price 15 total amount is 75

*Journal Enrty

Cash Account 75 $ / Shares 75 $ date 13/4/2010

sales loss 15 $ / Shares 15$

Journal Entry got generated with Valuation Amaount as Base

But its not accepatable by IFRS

IFRS Wants as follows

Last Journal Enrty should get generate as Purchase value base

*Journal Enrty

Cash Account 75 $ / Shares 75 $ date 13/4/2010

Shares 25$ / Sales Profit 25$

Is there is costamization to do this ? Is it possible to do like wise ?

Thank you in advance

Deepak Pawar

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1 Answer

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    Former Member
    Apr 13, 2010 at 06:05 AM

    Hi,

    Can you please tell us what kind of grouping of shares you are using because based on it the treatment changes. If it is an available for sale/trading securities then fair value accounting should be used where the unrealized valuation gains/losses should be accounted. Primarily it depends on the company to disclose the stocks at fair value or at the cost approach.

    If you want to disclose at the fair value i.e. it is an available for sale security then losses will be accounted from the book price only that is from the valuated price. What is happening is correct in your case.

    If you still want to realize the gain/loss from the cost, then when you do valuation in TPM1, don do year end valuation, do a mid year valuation with reset, so that a reversal flow for the valuation is generated the next day of valuation.

    Now when you sell it you will realize the gain or loss from the cost.

    Regards,

    Ravi

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    • Hi Deepak,

      I agree with Ravi, that depending on the grouping of your shares (or the valuation class you use) the treatment of the valuation changes.

      Regarding the customizing setting for controlling the treatment, you could use the security valuation procedure you have used in the position management procedure to control whether you would need the write up according to purchase value or market value. The link for changing the security valuation procedure is as follows: IMG >FSCM >TRM >TM >Accounting >Settings for Position Management >Key date valuation-->Define security valuation procedure.

      You can select your valuation procedure used in PMP and change the write-up/down Rule.

      Best Regards,

      Ajalesh