I’m so confused on some the practice problems, I’m not sure if I missed the readings but for example on question 17(pg 52) it talks about the pooling method. I don’t see it mentioned in the reading! Likewise for questions 11 - 16, I’m not sure where all the readings are.
For example, where can i find the reading related to EBT for FVPL??
14 Compared to Confabulated’s reported earnings before taxes in 2018, if Dumas had been classified as a FVPL security, the earnings before taxes (in € thousands) would have been:
A the same.
B €1,000 lower.
C €3,000 higher.
FVPL is discussed in the first few pages of the reading on inter-company investments.
Pooling method is very briefly discussed in the same reading. FYI the only thing you need to know about the pooling of interest method is that it used the book value for acquisition as compared to fair value in the acquisition method.
What material are you using, these two topics are covered in Schweser too.
Thanks for your help. I guess some of the questions are testing how interest/dividend/gains are treated under FVPL and FVOCI which I don’t really see mentioned in the CFA books. I just looked at the Schweser notes and they seem to mention it a bit.
Under Pooling of interest method, all the assets and liabilities are reported at Book value, which typically is a much older value, hence the equity will be lower because of the formula A=L+E
The concept is mentioned at page