INVESTMENT

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Types of Investment in a Company

Long Term Investments• Investment in Subsidiaries

Quoted Public CompaniesPrivate Companies

• Investment in Associates• Investment in Joint Venture Companies• Investment in Fixed Deposits

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Types of Investments in a company (Continued)

• Short Term Investments

• Fixed Deposits• Treasury Bills or REPOs• Equity Shares

Quoted Public CompaniesPrivate Companies

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Investment in Quoted Public Company Shares

• Important areas

Value of the Shares as at the reporting date.

Disposal Profit or Loss. Dividend Income.

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Investment in Quoted Public Company Shares (Continued)

Valuation

Under Previous SLAS

1. Cost or market value which ever is lower or Market Value

Under LKAS 39

Only market price

Change to the market value should be recognized in other comprehensive income

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Investment in Quoted Public Company Shares (Continued)

• Example X company had a B/F balance of 77,600 shares of ACL Cables PLC amounting to Rs 6,021,760 as at 01.04.2015 .During the year following transactions have been recorded in there investment account

• Acquired Shares Rs 01/04/2012 22,500 1,800,00015/04/2012 10,000 805,00020/05/2012 10,000 780,00021/05/2012 20,000 1,560,000

• Disposed Shares Rs16/04/2012 20,000 1,600,00022/05/2012 10,000 750,000

Prepare an investment account as at 31.03.2016Market value is 70 per share as at 31.03.2016

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Investment in Quoted Public Company Shares(Continued)

• Prepare an independent breakup.• Peruse bought notes and sold notes together

with CDs statements.• Verify all the dividend income received with

the bank statements and dividend warrants. • Attach all the copies of dividend warrants.• Reconcile the difference with ledger (if any).

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Investment in unquoted shares

• Need to be valued using valuation techniques• If it is not possible cost can be used.

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Investment In Fixed Deposits

• Why is it important ?

• It will affect three significant areas• Fixed deposit balance – Financial Position• Interest Income -Comprehensive

Income• WHT - Taxation

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Investment In Fixed Deposits

• Prepare an independent breakup• Peruse renewal notices.• Independently calculate the interest income

and cross check with the renewal notices.• Peruse fixed deposits certificates• Obtain WHT certificates.• Call for confirmations.

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Investment In Treasury Bills

• Prepare an independent breakup• Peruse treasury bill agreements.• Independently calculate the interest income

and cross check with the renewal notices• Reconcile the difference if any and pass

entries.• Call for confirmations.

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