Intercorporate Investments - Schweser Exercises - Ex 5
In T=0, the assets were worth 1200. We wrote down the assets to 1030 (from 1200) in period T+1. In T+2, the investment value goes up to 1250.
The question is the following: At T+2, Kirk will report the carrying value of its financial assets at: - 1030 - 1200 - 1250
Schweser said that it should be answer C. The increase in value requires that investment securities be written up to 1250. Because these are equity securities, the held-to-maturity classification is not available.
But I do not understand because in the syllabus they wrote that for: US GAAPS: reversal of impairment losses is not allowed. IAS/IFRS: reversal of impairment losses are not permitted for equity securities. BUT in the exercise, they said that “Kirk acquired shares” Can you explain me? Because I am really confused. Thanks a lot.