OCI

Question 1

Is the revaluation of PPE reclassified or not reclassified to the P/L?

Answer 1

Items not reclassified to P/L

On sale: Dr Reval surplus, Cr RE

Question 2

Is the revaluation of investment property reclassified or not reclassified to the P/L?

Answer 2

Items not reclassified to P/L

Question 3

Is remeasurement gain or loss on pensions reclassified or not reclassified on the P/L?

Answer 3

Items not reclassified to P/L

Question 4

Is cashflow hedge gain or loss reclassified or not reclassified to the P/L?

Answer 4

Items reclassified to P/L

Question 5

Is fair value measurement on any debt instruments reclassified or not reclassified to the P/L?

Answer 5

Items reclassified to P/L

Question 6

Is translation gain or loss reclassified to the P/L reclassified or not reclassified to the P/L?

Answer 6

Items reclassified to P/L

Question 7

Is the FV gain or loss on equities reclassified or not reclassified to the P/L?

Answer 7

Items not reclassified to P/L

Question 8

What is the default position under the Conceptual Framework for OCI?

Answer 8

Unless there is a rational reason, do not use OCI, put through P/L. Unless there is a rational reason, use reclassified.

Question 9

Why is a cashflow hedge in the reclassified section?

Answer 9

Take volatility out of P/L - reclassify when it hits

Question 10

Why is FV measurement on debt in the reclassified section?

Answer 10

It is not realised and not easily understood, we are still recording finance cost.

When we sell debt, we have realised the gain or loss.

Revaluing debt puts in volatility in P/L.

Question 11

Why is translation gains or losses reclassified in P/L?

Answer 11

Not easily understandable and would provide volatility to P/L.

When we sell, we have crystallised the fx gain or loss.

Question 12

Why is PPE not reclassified to P/L?

Answer 12

We have already recorded in one performance statement so we should not double count.

It is unrealised.

Question 13

Why is remeasurement gains or losses on pensions not reclassified to P/L?

Answer 13

Unknown timing, not easily understandable

Question 14

Why is FV gain or loss on equities in not reclassified to P/L?

Answer 14

If irrevocable election, they do not want the volatility

Question 15

Name the advantages of reclassifying?

Answer 15

• showing realised gains or losses when they happen
• ensuring all items eventually go to p/l
• match items to relevant transactions in p/l

Question 16

Name the disadvantages of reclassifying?

Answer 16

• double counting in performance statement
• unclear when the reclassify for certain items
• not easily understandable