Documente Academic
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Documente Cultură
Instruments
Hasan Aksakal
Flow of Discussion
Introduction
Classification
Recognition
and
Measurement
Impairment
Introduction
Date
Phase Completed
Introduction
Date
Phase Completed
Four categories:
-Fair value through profit or
loss (FVTPL)
-Loans and receivables
-Held to maturity (HTM)
-Available-for-sale financial
assets
IFRS 9
Three categories:
-Amortized cost
-Fair value through
other comprehensive
income (FVTOCI)
-Fair value through
profit or loss (FVTPL)
Two categories:
-Fair value through profit
or loss (FVTPL)
-Amortized cost
IFRS 9
No change to categories.
However, for financial
liabilities designated at
FVTPL under the fair
value option, the fair
value changes arising
from changes in the
entitys own credit risk
are recognized in OCI.
Financial Assets
Cash
An
Business Model
An
Examples
K Ltd, a banking company, issues loans to various customers in
Amortized cost
K
At Fair Value
IFRS
Examples
Ltd invests in 3 years redeemable preference shares of T Ltd. K Ltd holds these shares
until maturity and recovers the cash flows through dividend and principal repayment.
K Ltd invests in bonds of T Ltd. The intention is to hold these bonds for a longer term.
However, K Ltd decided to value the investment at fair value routed through profit and loss.
K Ltd has receivables of $5 million from T Ltd. The business model of K Ltd is to sell off the
receivables portfolio to 3rd party and recover money the moment sales are made.
K Ltd has invested in debentures of T Ltd. K Ltd has an intention to hold these debentures
until maturity. However, if K Ltd identifies a substantial gain, it may sell off the debentures to
realise the gain.
A perpetual
A debt instrument convertible into equity shares of the entity is considered at fair value, rather
than at amortised cost. The recovery is not necessarily coming through contractual cash flows
in form of principal and interest.
At fair value
K
Classification of Financial
Liabilities
Financial
liabilities at
amortized cost
Financial
liabilities at fair
value through
profit or loss
(FVTPL)
Financial liabilities at
amortized cost
Financial liabilities at
amortized cost
Financial liabilities at
amortized cost
Classification
Financial
Instruments
Financial
Assets
Financial
liabilities
At amortised
cost
FV through
Income
statement
FV through
Other
Comprehensi
ve Income
At fair value
through
income
statement
At amortised
cost
Measurement of Financial
Instruments
Initial Measurement:
At fair value, plus for those financial assets and liabilities not
classified at fair value through profit or loss, directly attributable
transaction costs.
Subsequent Measurement:
Classificati
on
Valuatio
n
FV
Change
s
Interest/
Dividend
s
Impai
rment
Forex
FAFVPL
FV
PL
PL
PL
PL
FAFVOCI
FV
OCI*
PL
PL/OCI
PL/OCI
FAAC
Amortize
d Cost
None
PL
PL
PL
Impairment of Financial
Instruments
Impairment of Financial
Instruments
At
After
Impairment of Financial
Instruments
Stage
Recognition of
impairment
12 month
expected credit
losses
Recognition of
interest
Effective interest
on the net
(carrying)
amount
Impairment of Financial
Instruments
General
Approach
Lease receivables
Contract assets (do not contain a significant
financing component)
Contract assets (contain a significant financing
component)
Simplified
Approach
Thank you
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