On December 31, 2019, Palm Co, a company that adopts IFRS, owned 54% of Rose Co, at which time Palm Co reported its investment at fair value through profit or loss owing to political instability in the country where Rose Co was located. On January 5, 2020, the management of Palm Co was satisfied that the political situation was stabilized and that the assets of Rose Co were no longer at risk of being transformed into public assets under the public ownership of a national government. Hence, Palm Co decided to prepare consolidated financial statements for the two companies for the year ended December 31, 2020.

Required:

Advise the companies on the above accounting issues, illustrating your advice, where appropriate, with relevant references, journal entries, financial extracts and numerical details. Note: Round to the nearest BD, if needed.

Answer rating: 100% (QA)

International Financial Reporting Standards IFRS are a set of acco... View the full answer