While at a board meeting, one of your fellow board members makes the following statement:
“We have made a significant investment in X Ltd., owning 35% of the company’s voting shares. We know that those shares have more than doubled in value, so I can’t understand why this isn’t reflected in the statement of financial position. While X Ltd. hasn’t declared any dividends, the gain in share value should be reflected in our net income. This was the case with the 15% interest we have in Y Ltd., so there must be an error here.”

Required
Evaluate your fellow board member’s statement. Identify and explain any deficiencies.