Question

Imagine you are investing in a company having more than 30% of investment and you feel the need to update the accounting books, what accounting approach would you use? Your investment is $1 million and the accounting year ends on December 31st 2019, the fair value of the investment goes up to $1.3 million on that date. How would you record in your books?

Answer 1

Economic approach
This approach attention on general economic welfare. Thus accounting principles and methods are assessed for acceptance dependent on their impact on the national economy. Sweden, in its national GAAP, uses an economic approach to its development. The IASB in developing its standards does tend to take an economic approach into account. For instance, the current conversation on accounting for leases focuses on the result that a standard requiring the capitalization of all leases, whether finance or operating, might have on the economy or business in general. Traditionally, accounting standards have been set without considering economic consequences but lobby pressures from clusters who observe themselves as being affected can be solid.

I will record my investment as cost as on year end , in any case if i need to show my fair value i will revalue the same and book 0.3 million as revaluation profit