What is real or unreal in accounting?

Or what is truth and fiction in accounting? SIA has booked a gain of $322m for selling its shares in Virgin Air for $439m. It bought the shares at a cost of $1.6b. I am a bit dull and think that this should be a loss of $1.161b! I am just being simple minded or ignorant of accounting practices and how profit and loss are computed.

Yes, the buying at $1.6b and selling at $439m led to a gain of $322m. I was reading Goh Eng Yeow’s article last Saturday and he explained how the apparent loss of $1.16b could turn into a profit of $322m. He said that over the years, the goodwill of Virgin Atlantic had been written down. There was also an amount of $117m written off to reserves. I do not know what this meant, really.

I must say that this is brilliant accounting practices and must be legal and correct. SIA is making money out of this deal by buying high and selling low. No wonder lay people are confused and there are companies like Muddy Waters trying to clean up the mud to make the water clean again.