Valuing publicly quoted shares at other than market price
Company Z acquires from Company X its 15% holding in the share capital of Company Y for €105 when the quoted price in an active market is €100. It intends to hold the shares as a strategic investment and they are classified as available-for-sale.
It appears that there is no scope for overcoming the presumption that a published price quotation in an active market is the best estimate of fair value. Therefore, the shares should be recorded at €100 resulting in a loss on initial recognition of €5 per share. Moreover, because the loss arises on initial recognition, not remeasurement, of an available-for-sale asset, it appears that the loss should be recognised in profit or loss (unless it can be argued to be a transaction cost).