Question $2$

Co X originally acquired $1,000,000$ shares in a listed entity Alfa Ltd$,$ at CU $0\mathrm{.}70$

per share and carries the shares at fair value under IFRS $9$ Financial Instruments

with movements in fair value recognised directly in other comprehensive income.

The quoted share price of CU $0\mathrm{.}80$ has been used to calculate fair value on $31$

December $20$X$9($CU $800,000).$ Under Co X$\text{'}$s tax jurisdiction any gain or loss on

sale is not taxable. The tax rate is $30\%.$ What is the tax base of this asset on $31$

December $20$X$9?$

Zero

CU $700,000$

CU $800,000$

CU $100,000$